A laboratory study of Demand Reduction and Collusion in Uniform- and Discriminatory-Price Auctions

A. Alexander Elbittar () and Andrei Gomberg

No 801, Working Papers from Centro de Investigacion Economica, ITAM

Abstract: We report results of an experimental study of multi-object uniform and discriminatory-price auctions in an environment of publicly known common values, concentrating on an environment where theory predicts sharply different results of the two auction formats. We find that the bidding behavior in the uniform case exhibits two clear regularities: agents consistently play weakly dominated strategies by overbidding on the first unit and have moderate difficulty coordinating on the high payoff (low auction revenue) equilibrium predicted by theory. However, subjects with experience in the same environment are better at reducing demand to achieve higher payoff. Bidders in discriminatory auctions, as predicted, tend to submit bids close to value for all units and are not generally successful in attempts at collusion.

Keywords: Experimental economics; Second price auctions (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com, nep-exp and nep-gth
Date: 2008-02
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Persistent link: http://EconPapers.repec.org/RePEc:cie:wpaper:0801

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