Impact of valuation ranking information on bidding in first-price auctions: A laboratory study

Elbittar, Alexander

doi:10.1016/j.jebo.2008.09.006

Cited by 5 publications

(3 citation statements)

References 37 publications

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“…9 Design choices vary sharply regarding whether to allow bids above value. In many experiments those bids are prevented [19][20][21], discouraged by design [22][23][24] or presented as "wrong" during instructions [10,25,26]. In the rare cases in which bids above value are allowed and not framed any way, some are observed although fewer than in our paper [27][28][29].…”

Section: Aggregate Bidding Functionsmentioning

confidence: 62%

Sequential Auctions with Capacity Constraints: An Experimental Investigation

Otamendi

Brocas

Carrillo

2018

Games

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Abstract:We conduct a laboratory experiment where groups of 4 subjects constrained to obtain at most one good each, sequentially bid for three goods in first and second price auctions. Subjects learn at the beginning of each auction their valuation for the good and exit the auction once they have obtained one good. We show that, contrary to equilibrium predictions, subjects' bidding behavior is excessively similar across units and across mechanisms at the aggregate level. We provide two (complementary) explanations for these departures. One is bounded rationality. Subjects do not fully comprehend subtle differences between mechanisms. The other is self-selection. Subjects are very heterogeneous and some of them deviate more from equilibrium than others. Since deviations take mostly the form of overbidding, these subjects win the first or second good and exit the auction, leaving those who play closer to theoretical predictions to bid for the third good. Support for this hypothesis comes from the documented higher bidding, lower efficiency and lower profits associated with the first and second unit compared to the third one.

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Section: Aggregate Bidding Functionsmentioning

confidence: 62%

Sequential Auctions with Capacity Constraints: An Experimental Investigation

Otamendi

Brocas

Carrillo

2018

Games

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“…A similar aberration appears when information is uncertain. Less specific bid feedback (given as bid ranks instead of actual bids) results in procurement bids that are lower in many scenarios thanks to bidder impatience (Elmaghraby et al 2012) and that increase the probability of a high-cost bidder winning the auction over a lost-cost bidder (Elbittar 2009). While these examples occur in the private value procurement setting, they highlight that bidder behavior can be difficult to predict.…”

Section: Procurement Auctionsmentioning

confidence: 99%

To Thine Own Self Be True: Asymmetric Information in Procurement Auctions

Wooten

Donohue

Fry

et al. 2020

Production and Operations Management

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As procurement auctions increasingly move to digital platforms, more data and information is available (or can be made available) to bidders. Despite this trend, relatively little is known about the impact of information asymmetries in these settings. We investigate two such differences in first‐price sealed‐bid reverse auctions with a common value. In a design that mirrors real construction procurement auctions, our laboratory experiment tests the impact of the precision of a bidder's cost estimate and the degree to which bidders know the inherent cost estimate precisions in the auction. We find that more understanding of estimate precision decreases bidder profit, counter to our expectation; however, we also find evidence of strategic behavior from those bidders that ratchets up pressure on competitors and pushes competitors toward bankruptcy. Most notably, understanding just one's own precision can help avoid the winner's curse in some settings. The same result does not apply if bidders also know their competitor's precision; more information does not help. The implication from our realistic setting—that reduced uncertainty may not help the bidder—raises important questions about the degree of transparency that is optimal in procurement auctions.

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“…(The last characterized the unique symmetric Bayes-Nash equilibrium in first-and second-price auctions of a single indivisible good with bidders with symmetric affiliated values) Zhan (2008) Review of optimality and efficiency issues McAfee and McMillan (1987b) Bidder's knowledge on number of opponents and riskattitude Eso and Futo (1999) Auctions with risk averse seller and risk neutral bidders Risk Bulow and Klemperer (2002) Analysis of the "winner's curse" and its impact on price formation Hong and Nishimura (2003) Comparison between English and second-price auction when item contains risk Eso ( 2005 Operations and characteristics of aftermarket where participants are the winners of a preliminary license auction Avery (1998) "Jump bidding" strategy and affiliated values Moresi (2000) Bidders' research to better estimate item's value for both private and common values Bidding Strategy Fibich et al, (2002) Study of behaviour of high-value bidders when they belong to the same high type group. Cramton (2004) Bidding strategy in uniform-price auctions Kim and Che (2004), Asymmetries in bidders knowledge about rivals Isaac et al (2005) Examination of "jump bidding" behavior in ascending auctions Dodonova and Khoroshilov (2006) Ability of target firm to reject highest offer in order to prevent from jump bidding strategies in takeover auctions Ham and Kagel (2006) Gender effects in a two-stage (indicative bidding) auction Andreoni et al, (2007) Asymmetries in bidders knowledge about rivals; Experimental analysis Isaac et al (2007) "Jump bidding" strategy due to strategic concerns and impatience At and Morand (2008) "Jump bidding" strategy in takeover auctions Drichoutis et al, (2008) Effect of indicative (reference) price in bidding strategy Goncalves (2008) Irrational bidding in common-value English auction Elbittar (2009) Experimental analysis of bidding behavior in FPSB auction; amongst two bidders, the bidder with lower valuation bids more aggressively after the revelation of the rankings of valuations…”

Section: Mechanism Designmentioning

confidence: 99%

Προηγμένες Δημοπρασίες Σε Δυναμικές Αγορές

Μαρεντάκης¹

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This thesis considers auctions as trading mechanisms in dynamic marketplaces. In the recent past, the evolution of Internet and wireless communications leveraged the wide and global expansion of auctions by abolishing time and location restrictions. These developments enabled the initiation of trade and participation for almost any type of entity like consumers, business, government etc. Moreover, the technological infrastructure facilitated and enhanced the implementation of more complex auction mechanisms introducing advanced properties like negotiation attributes, bundles of items, etc. The thesis focuses on the application of advanced forms of auctions in dynamic marketplaces where one or more of its dimensions are characterized by high variability. These dimensions can be, for example, the location of the trading item or market participants, the price, the available capacity, the number of participants, etc.An extended literature review mainly from the last decade yielded more than 450 research works dealing with auction mechanisms and corresponding auction theory, and more than 300 research works dealing with the implementation of auctions in electronic and mobile marketplaces. This number reflects the intensive research interest in the area of auctions. The extensive study of these resources demonstrated a serious gap on the systematic organization of auctions regarding the mechanism attributes, their parameters, and implementation instance. This thesis comes to bridge this gap by introducing a conceptual auction classification prototype that resulted from the intensive study of the research literature and the systematic unification of the findings. This model is conceptually defined as "Auction Classification Ecosystem -ACE" and it intends to be used in the future as the state-of-the-art model for auctions engineering.The ACE model consists of three discrete, yet strongly integrated Levels: (i) Level-1 supports the design of the basic auction mechanism, yet, it also supports the design of more complex multi-dimensional auction formats including special decision-making plug-ins, (ii) Level-2 deals with the enrichment of the core auction mechanism with additional parameters which entails enhancing characteristics related to, for example, robustness, fairness, competitiveness, etc., (iii) Level-3 aims on the efficient implementation of the auction supporting several types of decision-makers (e.g., auctioneer, technology provider, etc.) to organize the implementation of the auction and prioritize their actions depending on the implementation context. These layers can be used either independently of each other or in a sequential form. Overall, ACE is highly comprehensive and expandable and usuable, able to serve for: (i) the extensive and structured organization of auction-based dynamic marketplaces, (ii) the analysis of auction formats, (iii) the classification of literature and research findings (iv) the completeness in decision-making, (v) the expandability and integration with other research disciplines, a...

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Impact of valuation ranking information on bidding in first-price auctions: A laboratory study

Cited by 5 publications

References 37 publications

Sequential Auctions with Capacity Constraints: An Experimental Investigation

Sequential Auctions with Capacity Constraints: An Experimental Investigation

To Thine Own Self Be True: Asymmetric Information in Procurement Auctions

Προηγμένες Δημοπρασίες Σε Δυναμικές Αγορές

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