Multi-Object Auctions with Resale: An Experimental Analysis

Marco Pagnozzi and Krista Saral

CSEF Working Papers from Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy

Abstract: We analyze the effects of resale through bargaining in multi-object uniform-price auctions with asymmetric bidders. The possibility of resale affects bidders’ strategies, and hence the allocation of the objects on sale and the seller’s revenue. Our experimental design consists of four treatments: one without resale and three resale treatments that vary both the bargaining mechanism and the amount of information available in the resale market. As predicted by theory: (i) without resale, asymmetry among bidders reduces demand reduction; (ii) resale increases demand reduction by high-value bidders; (iii) low-value bidders speculate by bidding more aggressively with resale. Therefore, resale induces speculation and demand reduction which reduce auction efficiency. In contrast to what is usually argued, resale does not necessarily increase final efficiency and may not reduce the seller’s revenue. Features of the resale market that tend to increase its efficiency also reduce the seller’s revenue.

Keywords: multi-object auctions; resale; asymmetric bidders; bargaining; economic experiments (search for similar items in EconPapers)
JEL-codes: C90 D44 (search for similar items in EconPapers)
Date: 2013-01-28
New Economics Papers: this item is included in nep-com, nep-cta and nep-exp
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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Working Paper: Multi-Object Auctions with Resale: An Experimental Analysis (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:sef:csefwp:328

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