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

Funding Information:
We thank Paul Heihues, Jason Shachat, Georg Weizsäcker, and two anonymous referees for their very helpful comments and suggestions, as well as the audiences at the IMPRS in Jena, Colloquium in Behavioural Economics at Technische Universität Berlin, Durham University, Newcastle University, University of Exeter, East China Normal University, and the SAET Meeting in Cambridge.

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

ASJC Scopus subject areas

Business, Management and Accounting (all)
Economics and Econometrics

Access to Document

10.1111/ecin.12953

Cite this

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title = "AUCTIONS WITH LEAKS ABOUT EARLY BIDS: ANALYSIS AND EXPERIMENTAL BEHAVIOR",

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

Bibliographical note

ASJC Scopus subject areas

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