Ítem
Solo Metadatos

Valuation structure in first-price and least-revenue auctions: An experimental investigation

Título de la revista
Autores
Aycinena Abascal, Diego
Baltaduonis,Rimvydas
Rentschler,Lucas

Fecha
2014

Directores

ISSN de la revista
Título del volumen
Editor
Springer Nature

Buscar en:

Métricas alternativas

Resumen
Abstract
In many auctions the valuation structure involves both private and common value elements. Existing experimental evidence (e.g. Goeree and Offerman in Am. Econ. Rev. 92(3):625–643, 2002) demonstrates that first-price auctions with this valuation structure tend to be inefficient, and inexperienced subjects tend to bid above the break-even bidding threshold. In this paper, we compare first-price auctions with an alternative auction mechanism: the least-revenue auction. This auction mechanism shifts the risk regarding the common value of the good to the auctioneer. Such a shift is desirable when ex post negative payoffs for the winning bidder results in unfulfilled contracts, as is often the case in infrastructure concessions contracts. We directly compare these two auction formats within two valuation structures: (1) pure common value and (2) common value with a private cost. We find that, relative to first-price auctions, bidding above the break-even bidding threshold is significantly less prevalent in least-revenue auctions regardless of valuation structure. As a result, revenue in first-price auctions is higher than in least-revenue auctions, contrary to theory. Further, when there are private and common value components, least-revenue auctions are significantly more efficient than first-price auctions.
Palabras clave
Keywords
Auctions , Winner’s curse , Allocative efficiency , Bidding
Buscar en:
Colecciones