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

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dc.creatorAycinena Abascal, Diegospa
dc.creatorBaltaduonis,Rimvydasspa
dc.creatorRentschler,Lucasspa
dc.date.accessioned2020-08-06T16:21:33Z
dc.date.available2020-08-06T16:21:33Z
dc.date.created2014spa
dc.description.abstractIn 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.eng
dc.format.mimetypeapplication/pdf
dc.identifier.doihttps://doi.org/10.1007/s10683-013-9359-7
dc.identifier.issnISSN: 1386-4157
dc.identifier.issnEISSN: 1573-6938
dc.identifier.urihttps://repository.urosario.edu.co/handle/10336/26391
dc.language.isoengspa
dc.publisherSpringer Naturespa
dc.relation.citationEndPage128
dc.relation.citationIssueNo. 17
dc.relation.citationStartPage100
dc.relation.citationTitleExperimental Economics
dc.relation.ispartofExperimental Economics, ISSN:1386-4157;EISSN:1573-6938.No.17 (2014);PP.100-128spa
dc.relation.urihttps://link.springer.com/article/10.1007/s10683-013-9359-7spa
dc.rights.accesRightsinfo:eu-repo/semantics/restrictedAccess
dc.rights.accesoRestringido (Acceso a grupos específicos)spa
dc.sourceExperimental Economicsspa
dc.source.instnameinstname:Universidad del Rosario
dc.source.reponamereponame:Repositorio Institucional EdocUR
dc.subject.keywordAuctionsspa
dc.subject.keywordWinner’s cursespa
dc.subject.keywordAllocative efficiencyspa
dc.subject.keywordBiddingspa
dc.titleValuation structure in first-price and least-revenue auctions: An experimental investigationspa
dc.title.TranslatedTitleEstructura de valoración en subastas de primer precio y de menores ingresos: una investigación experimentalspa
dc.typearticleeng
dc.type.hasVersioninfo:eu-repo/semantics/publishedVersion
dc.type.spaArtículospa
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