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The Effect of Shill Bidding upon Prices: Experimental Evidence

Georgia Kosmopoulou and Dakshina De Silva ()

Experimental from EconWPA

Abstract: This paper explores, through a series of experiments, the effect of shill bidding upon revenues and prices in auctions. We study the practice of shill bidding in a common value framework. Our findings are consistent with the theoretical prediction that, if bidders are aware of the possibility of seller participation in an auction, shill bidding lowers profits on average. Shill bidding can alleviate the problem of the winner's curse by lowering the price and it can, thus, provide benefits to the bidders. Finally, even though there were too many bidders that submitted bids in these auctions, the number of entrants was not affected by the possibility of seller participation, which is also consistent with the theory.

Keywords: Auctions; Experiment; Shill Bidding; Entry (search for similar items in EconPapers)
JEL-codes: C91 D44 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-exp
Date: 2005-12-05
Note: Type of Document - pdf; pages: 38
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Journal Article: The effect of shill bidding upon prices: Experimental evidence (2007) Downloads
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