An Experimental Comparison of Sequential First- and Second-Price Auctions with Synergies

Abstract

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Auctions with synergy and resale

“…Leufkens et al (2006Leufkens et al ( , 2007 consider both theoretically and experimentally a sequential auction of two projects where the synergy factor appears as a multiplier on the stand-alone value of the second project. They model the sequential auctions as second-price sealed bid and show that the presence of synergies induces more competitive bidding, leading to lower expected profit to the bidders and higher expected revenue for the seller.…”

“…More specifically, we model resale in the framework adopted by Leufkens et al (2006Leufkens et al ( , 2007 described above. As is well known, one undesirable feature caused by synergies (in both simultaneous and sequential auctions)…”

Sequential Auctions with Capacity Constraints: An Experimental Investigation

“…To the best of our knowledge, there is only one existing set of sequential auction experiments where valuations for a good are drawn after the allocation of the previous one [13,14] are. The authors study a two-good setting with synergies, where the agent who obtains the first good has an increased valuation for the second good.…”

Capacity Constraints and Information Revelation in Procurement Auctions

“…While capacity constraints are known to exist for firms in the construction industry, the degree to which these constraints influence bidding behavior remains an open question. Researchers have worked to understand the behavior of capacity‐constrained firms using theoretical models (Jeitschko and Wolfstetter ; Saini , ), analysis of real‐world data (De Silva, Dunne, and Kosmopoulou , ; Jofre‐Bonet and Pesendorfer ) and data generated from laboratory economics experiments (Brosig and Reiss ; Leufkens, Peeters, and Vorsatz ). However, existing laboratory studies have been hampered by the absence of solutions to optimal behavior in dynamic asymmetric first‐price auctions.…”

“…For example, Brosig and Reiss () utilize a “highly stylized” two‐period experiment assuming that a bidder can win only one of the two projects, and that bidders are informed about the costs of both projects in the first period. Leufkens, Peeters, and Vorsatz () consider synergies between sequentially auctioned objects but stay within the two‐period framework where collusion is not a possibility. Recent advances in the theory and computation of auctions (Kaplan and Zamir ; Saini ) allow us to move away from the somewhat limited design of existing studies and enable us to capture important behavioral incentives associated with procurement auctions that rely on repeated interactions.…”