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Divisible Good Auctions with Asymmetric Information: An Experimental Examination

Published online by Cambridge University Press:  16 August 2013

Emmanuel Morales-Camargo ,
Orly Sade ,
Charles Schnitzlein  and
Jaime F. Zender
Emmanuel Morales-Camargo
Affiliation:
emc@uta.edu, College of Business, University of Texas at Arlington, 701 SWest St, Arlington, TX 76019
Orly Sade
Affiliation:
orlysade@mscc.huji.ac.il, Hebrew University, School of Business, Mount Scopus, Jerusalem 91905, Israel
Charles Schnitzlein
Affiliation:
charles.schnitzlein@bus.ucf.edu, University of Central Florida, College of Business Administration, PO Box 161400, Orlando, FL 32816
Jaime F. Zender*
Affiliation:
jaime.zender@colorado.edu, University of Colorado at Boulder, Leeds School of Business, UCB 419, Boulder, CO 80309.
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Abstract

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.

Type
Research Articles
Information
Journal of Financial and Quantitative Analysis , Volume 48 , Issue 4 , August 2013 , pp. 1271 - 1300
Copyright
Copyright © Michael G. Foster School of Business, University of Washington 2013 

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