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Fear of losing in a clock auction

Peter Cramton (), Emel Filiz-Ozbay, Erkut Ozbay () and Pacharasut Sujarittanonta
Authors registered in the RePEc Author Service: Emel Filiz Ozbay

Review of Economic Design, 2012, vol. 16, issue 2, 119-134

Abstract: We examine bidding behavior in a clock auction in which price is set by the lowest-accepted bid and provisional winners are reported each round (the LABpw auction). This format was used in the India 3G spectrum auction. In the standard theory, the auction performs poorly. In particular it yields lower revenues and is less efficient than the more standard clock auction with exit bids and highest-rejected-bid pricing (the HRB auction). However, the LABpw auction performs well in the lab, achieving higher revenues than the HRB auction. We show how fear of losing provides one motivation for the overbidding that causes higher revenues in the LABpw auction. Copyright Springer-Verlag 2012

Keywords: Clock auction; Regret; Lowest accepted bid; Provisional winner; D44; C78; L96 (search for similar items in EconPapers)
Date: 2012
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