Auctions and Leaks: A Theoretical and Experimental Investigation Auctions and Leaks: A Theoretical and Experimental Investigation

Sven Fischer (sven.fischer@newcastle.ac.uk), Werner Güth (gueth@coll.mpg.de), Todd Kaplan and Ro'i Zultan
Additional contact information
Sven Fischer: Newcastle University Business School
Werner Güth: LUISS Rome, Frankfurt School of Finance and Management, and Max Planck Institute on Collective Goods Bonn

No 2017-012, Jena Economics Research Papers from Friedrich-Schiller-University Jena

Abstract: (Revised Version of JERP 2014-027) In first- and second-price private value auctions with sequential bidding, second movers may discover the first movers' bid. Equilibrium behavior in the first-price auction is mostly unaffected but there are multiple equilibria in the second- price auction. Consequently, comparative statics across price rules are equivocal. Experimentally, leaks in the first-price auction favor second movers but harm first movers and sellers, as theoretically predicted. Low to medium leak probabilities eliminate the usual revenue dominance of first-over second-price auctions. With a high leak probability, second-price auctions generate significantly more revenue.

Keywords: auction; espionage; collusion; laboratory experiment (search for similar items in EconPapers)
JEL-codes: C72 C91 D44 (search for similar items in EconPapers)
Date: 2017-10-04
New Economics Papers: this item is included in nep-des, nep-exp and nep-gth
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Working Paper: Auctions and Leaks: A Theoretical and Experimental Investigation (2014)
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