Bidding behavior at sequential first-price auctions with(out) supply uncertainty: A laboratory analysis

Sequential Auctions with Capacity Constraints: An Experimental Investigation

“…Graphically, the theoretical bidding behavior shows differences between goods and mechanisms (lower bids in earlier goods and F auctions, see Predictions 1 and 2) whereas the aggregate experimental functions look similar (though not identical) across goods and mechanisms. 10 This is consistent with the winner's payoff data: the higher relative overbidding in F and in G1-G2 results in lower profits in those treatments.…”

“…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].…”

“…These results are replicated using an English auction in [9]. Patience or "wait-and-see" strategies have also been analyzed under the same experimental rules in [10], with the addition of uncertainty in the number of goods supplied. Finally, two consecutive first-price auctions with two bidders who can undertake only one project each have been studied [11].…”

Information availability at the competitive bidding stage for service contracts

“…Most literature describing theory on bidding decisions focus on auction-type processes [Cai et al, 2009;Schoenherr and Mabert, 2008;Neugebauer and Pezanis-Christou, 2007]. This means that the described approaches focus on a constrained bidding environment and low complexity and duration of the services discussed in this context [Schoenherr and Mabert, 2008].…”

“…Service contracts are often allocated through the process of competitive bidding where the competing suppliers communicate their service specifications and price bid to the customer who then evaluates the bids [Rexfelt and Ornäs, 2009;Bubshait and Almohawis, 1994]. This bidding process can include different levels of negotiation with the customer which can vary from an auction type bid [Friedman, 1956;Neugebauer and Pezanis-Christou, 2007] to an elaborate information exchange process [Lehman, 1986;Bajari et al, 2008]. These varying levels of negotiation leave the bidding supplier with different levels of uncertainty influencing the pricing decision process.…”