Commitment in first-price auctions

Philippe Gillen

No 19-062, ZEW Discussion Papers from ZEW - Leibniz Centre for European Economic Research

Abstract: We study the role of commitment in a first-price auction environment. We devise a simple two-stage model in which bidders first submit an initial offer that the auctioneer can observe and then make a counteroffer. There is no commitment on the auctioneer's side to accept an offer as is or even to choose the lowest bidder. We compare this setting to a standard first-price auction both theoretically and experimentally. While theory suggests that the offers and the auctioneer's revenue should be higher in a standard first-price auction compared to the first-price auction with renegotiation, we cannot confirm these hypotheses in the experiment.

Keywords: Auctions; Experiment (search for similar items in EconPapers)
JEL-codes: D44 D47 (search for similar items in EconPapers)
Date: 2019
New Economics Papers: this item is included in nep-des, nep-exp and nep-mic
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:zewdip:19062

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