Rapoport, Amnon and Otsubo, Hironori and Kim, Bora and Stein, William E. (2007): Unique bid auctions: Equilibrium solutions and experimental evidence.
Download (283Kb) | Preview
Two types of auction were introduced on the Internet a few years ago and have rapidly been gaining widespread popularity. In both auctions, players compete for an exogenously determined prize by independently choosing an integer in some finite and common strategy space specified by the auctioneer. In the unique lowest (highest) bid auction, the winner of the prize is the player who submits the lowest (highest) bid, provided that it is unique. We construct the symmetric mixed-strategy equilibrium solutions to the two auctions, and then test them in a sequence of experiments that vary the number of bidders and size of the strategy space. Our results show that the aggregate bids, but only a minority of the individual bidders, are accounted for quite accurately by the equilibrium solutions.
|Item Type:||MPRA Paper|
|Original Title:||Unique bid auctions: Equilibrium solutions and experimental evidence|
|Keywords:||unique bid auctions; equilibrium analysis; experiment|
|Subjects:||C - Mathematical and Quantitative Methods > C9 - Design of Experiments > C92 - Laboratory, Group Behavior
C - Mathematical and Quantitative Methods > C7 - Game Theory and Bargaining Theory > C72 - Noncooperative Games
|Depositing User:||Hironori Otsubo|
|Date Deposited:||21. Jul 2007|
|Last Modified:||07. Jan 2014 19:57|
Bajari, Patrick, and Ali Hortaçsu. 2004. “Economic Insights from Internet Auctions.” Journal of Economic Literature, 42(2): 457-486. Gneezy, Uri. 2005. “Step-Level Reasoning and Bidding in Auctions.” Management Science, 51(11): 1633-1642. Ivanova-Stenzel, Radosveta, and Doron Sonsino. 2004. “Comparative Study of One-Bid versus Two-Bid Auctions.” Journal of Economic Behavior & Organization, 54(4): 561-583. Krishna, Vijay. 2002. Auction Theory. San Diego, CA: Academic Press. Monderer, Dov, and Moshe Tennenholtz. 2000. “Optimal Auctions Revisited.” Artificial Intelligence, 120: 29-42. Monderer, Dov, and Moshe Tennenholtz. 2004. “K-price Auctions: Revenue Inequalities, Utility Equivalence, and Competition in Auction Design.” Economic Theory, 24: 255-270. Ockenfels, Axel., David Reiley, and Abdolkarim Sadrieh. 2007. “Online Auctions.” In Handbook of Economics and Information Systems Volume 1, ed. Terrence J. Hendershott. New York: Elsevier. Rapoport, Amnon, Darryl A. Seale, and Eyal Winter. 2002. “Coordination and Learning Behavior in Large Group with Asymmetric Players.” Games and Economic Behavior, 39: 111-136. Rapoport, Amnon, William E. Stein, James E. Parco, and Darryl A. Seale. 2004. “Equilibrium Play in Single-Server Queues with Endogenously Determined Arrival Times.” Journal of Economic Behavior and Organization, 55: 67-91. Raviv, Yaron, and Gabor Virag. 2007. “Gambling by Auctions.” http://www.econ.rochester.edu/Faculty/Virag/gambling_march_14_2007.pdf. Seale, Darryl A., and Amnon Rapoport. 2000. “Elicitation of Strategy Profiles in Large Group Coordination Games.” Experimental Economics, 3(2): 153-179. Turocy, Theodore. L., Elizabeth Watson, and Raymond C. Battalio. 2007. “Framing the First-Price Auction.” Experimental Economics, 10(1): 37-51. Vorob’ev, Nikolaĭ Nikolaevich. 1977. Game Theory: Lectures for Economics and System Scientists. Berlin: Springer-Verlag.