Bid pooling in reverse multi-unit Dutch auctions: an experimental investigation

Philippe Gillen, Alexander Rasch, Achim Wambach and Peter Werner
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Philippe Gillen: University of Cologne

Theory and Decision, 2016, vol. 81, issue 4, No 3, 534 pages

Abstract: Abstract In this article we experimentally investigate reverse multi-unit Dutch auctions in which bidders compete to sell their single unit to a buyer who wants to purchase several objects. Our study yields three insights: (i) bids are substantially higher than Nash equilibrium bids predicted by standard economic theory; (ii) these higher-than-predicted prices gradually decline in later periods; and (iii) bid pooling (or simultaneous bidding) is frequently observed—the majority of bidders submit their bids immediately after the first bidder has sold his unit. A model that distinguishes between myopic and sophisticated bidding strategies helps to organize these patterns both on the aggregate and on the individual level.

Keywords: Bounded rationality; Multi-unit auction; Procurement; Reverse Dutch auction (search for similar items in EconPapers)
JEL-codes: C91 D01 D44 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (2)

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DOI: 10.1007/s11238-016-9546-z

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