Auctions and Leaks: A Theoretical and Experimental Investigation

Sven Fischer (), Werner Güth (), Todd Kaplan and Ro'i Zultan
Additional contact information
Sven Fischer: Max Planck Institute of Economics, Jena, and Max Planck Institute for Research on Collective Goods, Bonn

No 2014-027, Jena Economics Research Papers from Friedrich-Schiller-University Jena

Abstract: We study first- and second-price private value auctions with sequential bidding where second movers may discover the first movers bids. There is a unique equilibrium in the first-price auction and multiple equilibria in the second-price auction. Consequently, comparative statics across price rules are equivocal. We experimentally find that in the first-price auction, leaks benefit second movers but harm first movers and sellers. Low to medium probabilities of leak eliminate the usual revenue dominance of first-price over second-price auctions. With a high probability of a leak, second-price auctions generate higher revenue.

Keywords: auctions; espionage; collusion; laboratory experiments (search for similar items in EconPapers)
JEL-codes: C72 C91 D44 (search for similar items in EconPapers)
Date: 2014-11-11
New Economics Papers: this item is included in nep-cta, nep-exp and nep-gth
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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https://oweb.b67.uni-jena.de/Papers/jerp2014/wp_2014_027.pdf (application/pdf)

Related works:
Working Paper: AUCTIONS AND LEAKS: A THEORETICAL AND EXPERIMENTAL INVESTIGATION (2014)
Working Paper: Auctions and Leaks: A Theoretical and Experimental Investigation (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:jrp:jrpwrp:2014-027

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