Endogenous reference price auctions for a diverse set of commodities: an experimental analysis

Olivier Armantier () and Charles Holt
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Olivier Armantier: Federal Reserve Bank of New York

Experimental Economics, 2024, vol. 27, issue 1, No 2, 9-35

Abstract: Abstract This paper is concerned with multi-object, multi-unit auctions with a budget constrained auctioneer who has noisy value estimates for each object. We propose a new allocation mechanism, the endogenous reference price auction, with two key features. First, bids are normalized across objects using “reference prices.” Second, reference prices are set endogenously using information extracted from the bids submitted. We report on an experiment showing that a simple endogenous process mitigates value inaccuracies and improves three performance measures: the seller’s profit, allocative efficiency and total surplus. These results have important implications for large auctions used in practice.

Keywords: Auction design; Laboratory experiment; Allocation mechanism (search for similar items in EconPapers)
JEL-codes: C92 D44 E58 G10 (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1007/s10683-022-09783-6

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