An experimental comparison of sequential first- and second-price auctions with synergies

K. Leufkens*, R.J.A.P. Peeters, M. Vorsatz

*Corresponding author for this work

Research output: Contribution to journalArticleAcademicpeer-review

7 Citations (Web of Science)


Using laboratory experiments, we compare the performance of first-price and second-price auctions when two stochastically equivalent objects are auctioned sequentially and the winner of the first auction receives a positive synergy in the second auction. According to the risk-neutral subgame perfect Nash equilibrium, the second-price auction provides more efficiency and a higher revenue to the seller, but a lower ex ante expected payoff to the bidders. Our experimental data indicate precisely the opposite results for format comparisons: the first-price auction gives rise to larger levels of efficiency and revenue, but lower payoffs to the bidders. Despite the lower payoff, the likelihood of an ex post loss is also smaller under the first-price auction. Our results therefore support the common use of the first-price auction in governmental and business-to-business procurements.

Original languageEnglish
Article number2
Number of pages28
JournalB E Journal of Theoretical Economics
Issue number1
Publication statusPublished - 1 Jan 2012


  • sequential auction
  • synergies
  • option value
  • exposure problem
  • experiment

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