Allotment in first-price auctions: an experimental investigation

Luca Corazzini, Stefano Galavotti (), Rupert Sausgruber and Paola Valbonesi

Experimental Economics, 2017, vol. 20, issue 1, No 4, 70-99

Abstract: Abstract We experimentally study the effects of allotment—the division of an item into homogeneous units—in independent private value auctions. We compare a bundling first-price auction with two equivalent treatments where allotment is implemented: a two-unit discriminatory auction and two simultaneous single-unit first-price auctions. We find that allotment in the form of a discriminatory auction generates a loss of efficiency with respect to bundling. In the allotment treatments, we observe large and persistent bid spread, and the discriminatory auction is less efficient than simultaneous auctions. We provide a unified interpretation of our results that is based on both a non-equilibrium response to the coordination problem characterizing the simultaneous auction format and a general class of behavioral preferences that includes risk aversion, joy of winning and loser’s regret as specific cases.

Keywords: Allotment; Multi-unit auction; Discriminatory auction; First-price auction; Laboratory experiment (search for similar items in EconPapers)
JEL-codes: D44 H57 (search for similar items in EconPapers)
Date: 2017
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Working Paper: Allotment In First-Price Auctions: An Experimental Investigation (2012)
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DOI: 10.1007/s10683-016-9476-1

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