 On the effects of joint bidding in independent private value auctions: An experimental studyKirill Chernomaz Games and Economic Behavior, 2012, vol. 76, issue 2, 690-710 Abstract: This article explores the effect of a subset of symmetric bidders joining to bid together. Possible applications include mergers, collusion and joint-bidding arrangements. The change produces a “strong” party with a more advantageous value distribution than the remaining “weak” bidder(s). The predicted effects include inefficiency, a decrease in the sellerʼs revenue, and higher biddersʼ payoffs. Under risk neutrality, the members of the strong party benefit less than the weak bidders. The prediction is reversed when the bidders are sufficiently risk-averse. These hypotheses are tested experimentally. Contrary to the theory, joint bidding increases efficiency and the sellerʼs revenue decreases by less than expected. Strong bidders benefit more than weak bidders indicating that incentives to bid jointly may be greater than hypothesized. Additionally, the experiment assesses the effect of group decision-making. A Nash equilibrium prediction for individual–group differences based on differences in risk attitudes is not supported by the data. Keywords: Asymmetric auctions; Independent private value; First-price auctions; Experimental economics; Group decision-making; Joint bidding; Mergers (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:gamebe:v:76:y:2012:i:2:p:690-710 DOI: 10.1016/j.geb.2012.08.004 Access Statistics for this article Games and Economic Behavior is currently edited by E. Kalai More articles in Games and Economic Behavior from Elsevier |
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