Outside options: Another reason to choose the first-price auction
Oliver Kirchkamp (),
Eva Poen () and
J. Philipp Rei
Authors registered in the RePEc Author Service: J. Philipp Reiss
European Economic Review, 2009, vol. 53, issue 2, 153-169
In this paper we study equilibrium and experimental bidding behaviour in first-price and second-price auctions with outside options. We find that bidders do respond to outside options and to variations of common knowledge about competitors' outside options. However, overbidding in first-price auctions is significantly higher with outside options than without. First-price auctions yield more revenue than second-price auctions. This revenue-premium is significantly higher with outside options. In second-price auctions the introduction of outside options has only a small effect.
Keywords: Auction; Outside; options; Experiments; Revenue-premium; First-price; auction; Second-price; auction; Overbidding; Strategy; method (search for similar items in EconPapers)
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Working Paper: Outside options: Another reason to choose the first-price auction (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:eecrev:v:53:y:2009:i:2:p:153-169
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