Negative Values in Vickrey Auctions

David Dickinson

American Journal of Agricultural Economics, 2004, vol. 86, issue 1, 222-235

Abstract: Some people assign negative values for new products sold on laboratory auction blocks (i.e., irradiated meat). We explore bidding behavior in two Vickrey auctions when people have positive- and negative-induced values for the good. Aggregate bidding in the second-price auction is precise but biased—highest-value positive bidders tend to overstate benefits, whereas lowest-negative bidders understate losses. In contrast, bidding behavior in the random nth-price auction is demand revealing irrespective of induced value, but it is imprecise. Examining on- and off-margin bidding behavior, we cannot conclude that any segments of demand are significantly different than the demand revealing regression line. Copyright 2004, Oxford University Press.

Date: 2004
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