Continuous ascending vs. pooled multiple unit auctions

Multiunit Auctions

“…() show that this increased competition is due to the bidders behaving as if they faced more competition than they actually did. Salmon and Iachini () study a “pooled” auction as an alternative to the SAA . The former is a version of a multiple‐unit SB auction and is similar to a bidders' choice auction in that the highest bidder wins the right to choose the good.…”

“…The key difference is that it is a single‐stage mechanism, with the second‐highest bidder picking after the first one and so on; all winning bidders pay their bids. Salmon and Iachini () consider a relatively competitive environment with seven bidders competing for five objects, and all bidders having the same preference rankings over the objects. They report very aggressive bidding resulting in up to 40% higher revenue in the pooled auction than in the SAA.…”

“…The pooled auction also yielded persistent losses for the bidders. Salmon and Iachini () explain such aggressive overbidding by attentional bias, with the subjects focusing their attention on their best two or three items, and ignoring the possibility of winning other items.…”

“…It is interesting to note that bidders tendency to focus on one or a few objects manifests itself across a variety of multiobject settings, but has different effects depending on the setting. It causes overly aggressive bidding in pooled auctions (see Salmon and Iachini, discussed in Section ), may result in bidding on only a subset of all profitable packages in combinatorial auctions (see Kagel et al ., , discussed in Section ), and facilitates collusion in sequential auctions, as discussed here.…”

Rent seeking in groups

“…This does not match our findings. Salmon and Iachini (2007) provides a model of attentional bias in which decision makers place less weight on undesirable states than they should, which is able to explain overbidding in all-pay auctions. Applications of that model to this environment, though, cannot generate over-contribution to the degree observed here for reasonable parameterizations.…”