Competition and cooperation in divisible good auctions: An experimental examination

Orly Sade, Charles Schnitzlein, Jaime F. Zender*

*Corresponding author for this work

Research output: Contribution to journalReview articlepeer-review

34 Scopus citations

Abstract

An experimental approach is used to examine the performance of three different multiunit auction designs: discriminatory, uniform-price with fixed supply, and uniform-price with endogenous supply. We find the actual strategies to be inconsistent with theoretically identified equilibrium strategies. The discriminatory auction is found to be more susceptible to collusion than either uniform-price auction and so, contrary to theoretical predictions and previous experimental results, it generates the lowest average revenue. Consistent with theoretical predictions, the actual bid schedules are more elastic with reducible supply or discriminatory pricing than in the uniform-price auction with fixed supply.

Original languageAmerican English
Pages (from-to)195-235
Number of pages41
JournalReview of Financial Studies
Volume19
Issue number1
DOIs
StatePublished - 1 Jan 2006

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