Empirical bias and efficiency of alpha-auctions: experimental evidence
Alexander Brown () and
Rodrigo Velez ()
Papers from arXiv.org
We experimentally evaluate the comparative performance of the winner-bid, average-bid, and loser-bid auctions for the dissolution of a partnership. The recently introduced empirical equilibrium analysis of Velez and Brown (2019) reveals that as long as behavior satisfies weak payoff monotonicity, winner-bid and loser-bid auctions necessarily exhibit a form of bias when empirical distributions of play approximate best responses. We find support for both weak payoff monotonicity and the form of bias predicted by the theory for these two auctions. Consistently with the theory, the average-bid auction does not exhibit this form of bias. It has lower efficiency that the winner-bid auction, however.
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