Working papers in Transport Economics,
CTS - Centre for Transport Studies Stockholm (KTH and VTI)

Abstract: This study addresses a discrete common value environment with independent (one-dimensional) private signals, where the seller offers two identical units and the buyers have (flat) demand for both. Each session is conducted with 2, 3 or 4 buyers. Three auction formats are used: the discriminatory, uniform and Vickrey auctions which are all subjected to a variation in the number of bidders and to repeating bid rounds on each subject. The main findings are that there are no significant differences between the uniform and the discriminatory auction in collecting revenue, while the Vickrey auction comes out as inferior. More bidders in the auction result in a greater revenue and level out the performance across the mechanisms. Demand reduction is visible in the experiment, but it is not as prominent as anticipated. Moreover, subjects come closer to equilibrium play over time. Finally, the winner's curse is less severe than what is reported for inexperienced bidders in other studies.

Keywords: Laboratory experiment; Multi-unit auction; Common value auction

JEL-codes: C72; C91; D44

37 pages, November 5, 2012

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CTS2012-23.pdf  

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