Varying the number of bidders in the first-price sealed-bid auction: experimental evidence for the one-shot game

Tibor Neugebauer and Sascha F Llbrunn
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Sascha F Llbrunn: LSF

LSF Research Working Paper Series from Luxembourg School of Finance, University of Luxembourg

Abstract: The paper reports experimental data on the behavior in the first-price sealed-bid auction for a varying number of bidders when values and bids are private information. This feedback-free design is proposed for the experimental test of the one-shot game situation. We consider both within-subject and betweensubjects variations. In line with the qualitative risk neutral Nash equilibrium prediction, the data show that bids increase in the number of bidders. However, in auctions involving a small number of bidders, average bids are above, and in auctions involving a larger number of bidders, average bids are below the risk neutral equilibrium prediction. The quartile analysis reveals that bidding behavior is not constant across the full value range for a given number of bidders. On the high value quartiles, however, the average bid-value ratio is not different from the risk neutral prediction. The behavior is different when the winning bid is revealed after each repetition. "Classification-JEL: ""C92; D44"""

Date: 2013
New Economics Papers: this item is included in nep-cta and nep-exp
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Citations: View citations in EconPapers (5)

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Journal Article: Varying the number of bidders in the first-price sealed-bid auction: experimental evidence for the one-shot game (2013)
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