Keeping out Trojan Horses: Auctions and Bankruptcy in the Laboratory

Sander Onderstal and Ailko van der Veen
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Ailko van der Veen: University of Amsterdam

No 11-024/1, Tinbergen Institute Discussion Papers from Tinbergen Institute

Abstract: If a government auctions the right to market a good, continuity is likely to be of significant importance. In a laboratory experiment, we compare the effects of bidders' limited liability in the first-price sealed-bid auction and the English auction in a common value setting. Our data strongly reject our theoretical prediction that the English auction leads to less aggressive bids and fewer bankruptcies than the first-price sealed-bid auction. X -cursedness gives a robust explanation of our experimental observations, in contrast to risk aversion and asymmetric equilibria.

Keywords: Auctions; Bankruptcy; Laboratory Experiment (search for similar items in EconPapers)
JEL-codes: C91 D44 L41 (search for similar items in EconPapers)
Date: 2011-02-11
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Citations: View citations in EconPapers (2)

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