AUCTIONS WITH LEAKS ABOUT EARLY BIDS: ANALYSIS AND EXPERIMENTAL BEHAVIOR

Sven Fischer; Werner Güth; Todd R. Kaplan; Ro'i Zultan

doi:10.1111/ecin.12953

AUCTIONS WITH LEAKS ABOUT EARLY BIDS: ANALYSIS AND EXPERIMENTAL BEHAVIOR

Sven Fischer, Werner Güth, Todd R. Kaplan, Ro'i Zultan

Department of Economics

Research output: Contribution to journal › Article › peer-review

Abstract

In sequential first- and second-price private value auctions, second movers are informed about the first movers' bid with commonly known probability. Equilibrium bidding in first-price auctions is mostly unaffected, but there are multiple equilibria in second-price auctions affecting comparative statics across price rules. We show experimentally that informational leaks in first-price auctions qualitatively confirm the theoretical predictions. In second-price auctions, we analyze and experimentally confirm the existence of focal equilibria, and provide evidence for individual consistency in equilibrium selection. (JEL D44, C72, C91).

Original language	English
Pages (from-to)	722-739
Number of pages	18
Journal	Economic Inquiry
Volume	59
Issue number	2
DOIs	https://doi.org/10.1111/ecin.12953
State	Published - Apr 2021

Bibliographical note

Publisher Copyright:
© 2020 The Authors. Economic Inquiry published by Wiley Periodicals LLC on behalf of Western Economic Association International.

ASJC Scopus subject areas

General Business, Management and Accounting
Economics and Econometrics

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10.1111/ecin.12953

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abstract = "In sequential first- and second-price private value auctions, second movers are informed about the first movers' bid with commonly known probability. Equilibrium bidding in first-price auctions is mostly unaffected, but there are multiple equilibria in second-price auctions affecting comparative statics across price rules. We show experimentally that informational leaks in first-price auctions qualitatively confirm the theoretical predictions. In second-price auctions, we analyze and experimentally confirm the existence of focal equilibria, and provide evidence for individual consistency in equilibrium selection. (JEL D44, C72, C91).",

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AUCTIONS WITH LEAKS ABOUT EARLY BIDS: ANALYSIS AND EXPERIMENTAL BEHAVIOR

Abstract

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