Valuation structure in first-price and least-revenue auctions: An experimental investigation
In many auctions the valuation structure involves both private and common value elements. Existing experimental evidence (e.g. Goeree and Offerman in Am. Econ. Rev. 92(3):625–643, 2002) demonstrates that first-price auctions with this valuation structure tend to be inefficient, and inexperienced sub...
- Autores:
- Tipo de recurso:
- Fecha de publicación:
- 2014
- Institución:
- Universidad del Rosario
- Repositorio:
- Repositorio EdocUR - U. Rosario
- Idioma:
- eng
- OAI Identifier:
- oai:repository.urosario.edu.co:10336/26391
- Acceso en línea:
- https://doi.org/10.1007/s10683-013-9359-7
https://repository.urosario.edu.co/handle/10336/26391
- Palabra clave:
- Auctions
Winner’s curse
Allocative efficiency
Bidding
- Rights
- License
- Restringido (Acceso a grupos específicos)
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71597060069d60981-efa3-4ea2-8328-41f6f311fde33a1e0674-fc05-4513-b46b-b21a859020002020-08-06T16:21:33Z2020-08-06T16:21:33Z2014In many auctions the valuation structure involves both private and common value elements. Existing experimental evidence (e.g. Goeree and Offerman in Am. Econ. Rev. 92(3):625–643, 2002) demonstrates that first-price auctions with this valuation structure tend to be inefficient, and inexperienced subjects tend to bid above the break-even bidding threshold. In this paper, we compare first-price auctions with an alternative auction mechanism: the least-revenue auction. This auction mechanism shifts the risk regarding the common value of the good to the auctioneer. Such a shift is desirable when ex post negative payoffs for the winning bidder results in unfulfilled contracts, as is often the case in infrastructure concessions contracts. We directly compare these two auction formats within two valuation structures: (1) pure common value and (2) common value with a private cost. We find that, relative to first-price auctions, bidding above the break-even bidding threshold is significantly less prevalent in least-revenue auctions regardless of valuation structure. As a result, revenue in first-price auctions is higher than in least-revenue auctions, contrary to theory. Further, when there are private and common value components, least-revenue auctions are significantly more efficient than first-price auctions.application/pdfhttps://doi.org/10.1007/s10683-013-9359-7ISSN: 1386-4157EISSN: 1573-6938https://repository.urosario.edu.co/handle/10336/26391engSpringer Nature128No. 17100Experimental EconomicsExperimental Economics, ISSN:1386-4157;EISSN:1573-6938.No.17 (2014);PP.100-128https://link.springer.com/article/10.1007/s10683-013-9359-7Restringido (Acceso a grupos específicos)http://purl.org/coar/access_right/c_16ecExperimental Economicsinstname:Universidad del Rosarioreponame:Repositorio Institucional EdocURAuctionsWinner’s curseAllocative efficiencyBiddingValuation structure in first-price and least-revenue auctions: An experimental investigationEstructura de valoración en subastas de primer precio y de menores ingresos: una investigación experimentalarticleArtículohttp://purl.org/coar/version/c_970fb48d4fbd8a85http://purl.org/coar/resource_type/c_6501Aycinena Abascal, DiegoBaltaduonis,RimvydasRentschler,Lucas10336/26391oai:repository.urosario.edu.co:10336/263912021-08-17 06:09:07.503https://repository.urosario.edu.coRepositorio institucional EdocURedocur@urosario.edu.co |
dc.title.spa.fl_str_mv |
Valuation structure in first-price and least-revenue auctions: An experimental investigation |
dc.title.TranslatedTitle.spa.fl_str_mv |
Estructura de valoración en subastas de primer precio y de menores ingresos: una investigación experimental |
title |
Valuation structure in first-price and least-revenue auctions: An experimental investigation |
spellingShingle |
Valuation structure in first-price and least-revenue auctions: An experimental investigation Auctions Winner’s curse Allocative efficiency Bidding |
title_short |
Valuation structure in first-price and least-revenue auctions: An experimental investigation |
title_full |
Valuation structure in first-price and least-revenue auctions: An experimental investigation |
title_fullStr |
Valuation structure in first-price and least-revenue auctions: An experimental investigation |
title_full_unstemmed |
Valuation structure in first-price and least-revenue auctions: An experimental investigation |
title_sort |
Valuation structure in first-price and least-revenue auctions: An experimental investigation |
dc.subject.keyword.spa.fl_str_mv |
Auctions Winner’s curse Allocative efficiency Bidding |
topic |
Auctions Winner’s curse Allocative efficiency Bidding |
description |
In many auctions the valuation structure involves both private and common value elements. Existing experimental evidence (e.g. Goeree and Offerman in Am. Econ. Rev. 92(3):625–643, 2002) demonstrates that first-price auctions with this valuation structure tend to be inefficient, and inexperienced subjects tend to bid above the break-even bidding threshold. In this paper, we compare first-price auctions with an alternative auction mechanism: the least-revenue auction. This auction mechanism shifts the risk regarding the common value of the good to the auctioneer. Such a shift is desirable when ex post negative payoffs for the winning bidder results in unfulfilled contracts, as is often the case in infrastructure concessions contracts. We directly compare these two auction formats within two valuation structures: (1) pure common value and (2) common value with a private cost. We find that, relative to first-price auctions, bidding above the break-even bidding threshold is significantly less prevalent in least-revenue auctions regardless of valuation structure. As a result, revenue in first-price auctions is higher than in least-revenue auctions, contrary to theory. Further, when there are private and common value components, least-revenue auctions are significantly more efficient than first-price auctions. |
publishDate |
2014 |
dc.date.created.spa.fl_str_mv |
2014 |
dc.date.accessioned.none.fl_str_mv |
2020-08-06T16:21:33Z |
dc.date.available.none.fl_str_mv |
2020-08-06T16:21:33Z |
dc.type.eng.fl_str_mv |
article |
dc.type.coarversion.fl_str_mv |
http://purl.org/coar/version/c_970fb48d4fbd8a85 |
dc.type.coar.fl_str_mv |
http://purl.org/coar/resource_type/c_6501 |
dc.type.spa.spa.fl_str_mv |
Artículo |
dc.identifier.doi.none.fl_str_mv |
https://doi.org/10.1007/s10683-013-9359-7 |
dc.identifier.issn.none.fl_str_mv |
ISSN: 1386-4157 EISSN: 1573-6938 |
dc.identifier.uri.none.fl_str_mv |
https://repository.urosario.edu.co/handle/10336/26391 |
url |
https://doi.org/10.1007/s10683-013-9359-7 https://repository.urosario.edu.co/handle/10336/26391 |
identifier_str_mv |
ISSN: 1386-4157 EISSN: 1573-6938 |
dc.language.iso.spa.fl_str_mv |
eng |
language |
eng |
dc.relation.citationEndPage.none.fl_str_mv |
128 |
dc.relation.citationIssue.none.fl_str_mv |
No. 17 |
dc.relation.citationStartPage.none.fl_str_mv |
100 |
dc.relation.citationTitle.none.fl_str_mv |
Experimental Economics |
dc.relation.ispartof.spa.fl_str_mv |
Experimental Economics, ISSN:1386-4157;EISSN:1573-6938.No.17 (2014);PP.100-128 |
dc.relation.uri.spa.fl_str_mv |
https://link.springer.com/article/10.1007/s10683-013-9359-7 |
dc.rights.coar.fl_str_mv |
http://purl.org/coar/access_right/c_16ec |
dc.rights.acceso.spa.fl_str_mv |
Restringido (Acceso a grupos específicos) |
rights_invalid_str_mv |
Restringido (Acceso a grupos específicos) http://purl.org/coar/access_right/c_16ec |
dc.format.mimetype.none.fl_str_mv |
application/pdf |
dc.publisher.spa.fl_str_mv |
Springer Nature |
dc.source.spa.fl_str_mv |
Experimental Economics |
institution |
Universidad del Rosario |
dc.source.instname.none.fl_str_mv |
instname:Universidad del Rosario |
dc.source.reponame.none.fl_str_mv |
reponame:Repositorio Institucional EdocUR |
repository.name.fl_str_mv |
Repositorio institucional EdocUR |
repository.mail.fl_str_mv |
edocur@urosario.edu.co |
_version_ |
1814167696709779456 |