An experimental analysis of auctions with interdependent valuations

Oliver Kirchkamp*, Benny Moldovanu

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

Abstract

We study experiments in an auction setting with interdependent valuation. Groups of three players receive private signals and then bid for a single, indivisible item. Valuations for the item differ within groups and depend asymmetrically on a bidder's own and other bidders' signals. Theoretically, the English auction yields efficient allocations, while other standard auction formats fail to do so. Consistent with equilibrium predictions, we find that an English auction yields significantly more efficiency than a second-price sealed-bid auction. We also study the seller's expected revenue and the bidders' expected profits, and find that the experimental results are close to the theoretical predictions.

Original languageEnglish
Pages (from-to)54-85
Number of pages32
JournalGames and Economic Behavior
Volume48
Issue number1
DOIs
StatePublished - Jul 2004
Externally publishedYes

Funding

FundersFunder number
Deutsche ForschungsgemeinschaftSFB 504

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