Abstract
In this article we experimentally investigate reverse multi-unit Dutch auctions in which bidders compete to sell their single unit to a buyer who wants to purchase several objects. Our study yields three insights: (i) bids are substantially higher than Nash equilibrium bids predicted by standard economic theory; (ii) these higher-than-predicted prices gradually decline in later periods; and (iii) bid pooling (or simultaneous bidding) is frequently observed-the majority of bidders submit their bids immediately after the first bidder has sold his unit. A model that distinguishes between myopic and sophisticated bidding strategies helps to organize these patterns both on the aggregate and on the individual level.
Original language | English |
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Pages (from-to) | 511-534 |
Number of pages | 24 |
Journal | Theory and Decision |
Volume | 81 |
Issue number | 4 |
DOIs | |
Publication status | Published - Nov 2016 |
Keywords
- Bounded rationality
- Multi-unit auction
- Procurement
- Reverse Dutch auction
- 1ST-PRICE AUCTIONS
- PRICE-COMPETITION
- WINNERS CURSE
- COLLUSION
- BEHAVIOR
- MODEL
- OLIGOPOLY
- BELIEFS
- GAMES