Multi-Object Auctions with Resale: An Experimental Analysis

Pagnozzi, Marco and Saral, Krista Jabs (2013): Multi-Object Auctions with Resale: An Experimental Analysis.

Abstract

We analyze the effects of resale through bargaining in multi-object uniform-price auctions with asymmetric bidders. The possibility of resale affects bidders' strategies, and hence the allocation of the objects on sale and the seller's revenue. Our experimental design consists of four treatments: one without resale and three resale treatments that vary both the bargaining mechanism and the amount of information available in the resale market. As predicted by theory: (i) without resale, asymmetry among bidders reduces demand reduction; (ii) resale increases demand reduction by high-value bidders; (iii) low-value bidders speculate by bidding more aggressively with resale. Therefore, resale induces speculation and demand reduction which reduce auction efficiency. In contrast to what is usually argued, resale does not necessarily increase final efficiency and may not reduce the seller's revenue. Features of the resale market that tend to increase its efficiency also reduce the seller's revenue.

• Item Type: MPRA Paper
• Language: English
• Keywords: multi-object auctions, resale, asymmetric bidders, bargaining, economic experiments
• Subjects: D - Microeconomics > D4 - Market Structure, Pricing, and Design > D44 - Auctions; C - Mathematical and Quantitative Methods > C9 - Design of Experiments > C90 - General

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