Bidding behaviour in the multi-unit Vickrey and uniform price auctions

John Bernard (), William Schulze and Timothy Mount

Applied Economics Letters, 2005, vol. 12, issue 10, 589-595

Abstract: Theory provides limited understanding of auctions in complex, multi-unit settings. This absence became apparent when performance concerns were raised over wholesale electric power auctions in England and California. This research used experiments involving 234 subjects to partially bridge the gap in knowledge with regard to bidding behaviour. Using a complex procurement setting motivated by power markets, bidding in the last accepted and first rejected uniform price auctions and the multi-unit Vickrey were examined across group sizes of 2, 4, and 6. To allow opportunity for tacit collusion, constant cost and demand conditions were maintained for 75 periods. Group size and experience were found to be most significant in explaining the differences between bids and costs. For groups of 2, this difference was significantly higher than with the other sizes, suggesting market power. Across sizes, after experience there was no significant difference in bidding behaviour between the uniform price auctions, with subjects in both bidding well above costs. Differences in the multi-unit Vickrey decreased after experience but, unexpectedly, bids were often below costs. Under no combinations did bids equal costs as would be desired by market designers. Results should give concern to policy analysts, and research suggestions to theorists.

Date: 2005
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
http://www.informaworld.com/openurl?genre=article& ... 40C6AD35DC6213A474B5 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:apeclt:v:12:y:2005:i:10:p:589-595

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/RAEL20

DOI: 10.1080/13504850500181807

Access Statistics for this article

Applied Economics Letters is currently edited by Anita Phillips

More articles in Applied Economics Letters from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().