Bidder Behavior in a Common Value Simultaneous Ascending Auction

Robert Griffin and Christopher Anderson

Strategic Behavior and the Environment, 2015, vol. 5, issue 3-4, 215-253

Abstract: We develop and experimentally test a model of bidder behavior in a simultaneous ascending auction for heterogeneous common value goods. The model follows the "straightforward" strategy developed by Milgrom (2000) while accounting for the adverse selection effect and the potential for the winner's curse. When this model is evaluated against laboratory results, we find that bidders deviate from the predicted price path as we observe extensive jump bidding and lower final prices than predicted. We observe that jump bidding generally increases prices and decreases earnings, suggesting that jump bids are based on bidder impatience rather than strategic motivations. Despite the failure of the model to predict bidder behavior, it does offer significant predictive power regarding the final allocation of goods and avoidance of the winner's curse.

Keywords: Simultaneous ascending auction; Common value; Experiment; Energy (search for similar items in EconPapers)
JEL-codes: C11 C38 C91 D44 Q48 (search for similar items in EconPapers)
Date: 2015
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Persistent link: https://EconPapers.repec.org/RePEc:now:jnlsbe:102.00000061

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