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Discrete Clock Auctions: An Experimental Study

Peter Cramton (), Emel Filiz-Ozbay (), Erkut Ozbay () and Pacharasut Sujarittanonta
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Emel Filiz-Ozbay: Economics Department, University of Maryland, http://www.econ.umd.edu

Authors registered in the RePEc Author Service: Emel Filiz Ozbay

Papers of Peter Cramton from University of Maryland, Department of Economics - Peter Cramton

Abstract: We analyze the implications of different pricing rules in discrete clock auctions. The two most common pricing rules are highest-rejected bid (HRB) and lowest-accepted bid (LAB). Under HRB, the winners pay the lowest price that clears the market; under LAB, the winners pay the highest price that clears the market. In theory, both the HRB and LAB auctions maximize revenues and are fully efficient in our setting. Our experimental results indicate that the LAB auction achieves higher revenues. This revenue result may explain the frequent use of LAB pricing. On the other hand, HRB is successful in eliciting true values of the bidders both theoretically and experimentally.

Keywords: Auctions; clock auctions; spectrum auctions; behavioral economics; market design (search for similar items in EconPapers)
JEL-codes: D44 C78 L96 (search for similar items in EconPapers)
Pages: 20 pages
Date: 2012, Revised 2012
New Economics Papers: this item is included in nep-exp
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Published in Experimental Economics, 15:2, 309-322, 2012

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Journal Article: Discrete clock auctions: an experimental study (2012) Downloads
Working Paper: Discrete Clock Auctions: An Experimental Study (2010) Downloads
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