An experimental approach is used to compare bidding behavior and auction performance in uniform-price and discriminatory auctions when there is incomplete information concerning the common value of the auctioned good. In a symmetric information environment, the different auction formats provide the same average revenue. However, when information is asymmetric the discriminatory auction results in higher average revenue than the uniform-price auction. The volatility of revenue is higher in the uniform-price auctions in all treatments. The results, therefore, provide support for the use of the discriminatory format. Subject characteristics and measures of experience in recent auctions are found to be useful in explaining bidding behavior.
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We thank conference participants at the 2009 International Meeting of the Economic Science Association in Washington, DC; the 2009 North American meeting of the Economic Science Association in Tucson, AZ; the 2011 meeting of the Financial Management Association; seminar participants at the University of Colorado; and Kent Daniel, John Lynch, Paul Malatesta (the editor), Atanu Sinha, and especially an anonymous referee for valuable comments. We also thank the University of New Mexico, New York University, and the Hebrew University of Jerusalem for their financial support of this research. In addition, Sade thanks the Kruger Center at the Hebrew University and the Israel Science Foundation (ISF 480/05). Sade thanks the Stern School of Business at New York University and the IE Business School for their support and hospitality. 08 2013 48 4 1271 1300