Entry decisions and bidding behavior in sequential first-price procurement auctions: An experimental study

Brosig, Jeannette; Reiss, Julian

doi:10.1016/j.geb.2006.03.011

Cited by 43 publications

(34 citation statements)

References 18 publications

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“…The experimental data, however, generated by the implementation of our procurement auction model in the laboratory, see Brosig and Reiß (2007), suggest that the option value of alternative transaction opportunities strongly influences bidding and entry behavior in the lab similarly to the theoretical predictions and renders our approach relevant.…”

Section: Discussionmentioning

confidence: 70%

“…An experimental investigation of our sequential first-price auction model, see Brosig and Reiß (2007), finds that the bidding deviations from the standard SIPV model predicted by our model are, indeed, observed in the laboratory. This finding emphasizes that opportunity costs of early bid submissions are understood by bidders and form a crucial determinant of bidding behavior.…”

Section: Introductionmentioning

confidence: 60%

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First-price equilibrium and revenue equivalence in a sequential procurement auction model

Reiss

Schöndube

2008

Econ Theory

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We analyze first-price equilibrium bidding behavior of capacityconstrained firms in a sequence of two procurement auctions. In the model, firms with a cost advantage in completing the project auctioned off at the end of the sequence may enter the unfavored first auction hoping to lose it. Equilibrium bidding in both auctions deviates from the standard Symmetric Independent Private Value auction model due to opportunity costs of bidding created by possibly employed capacity. For this sequential auction model with non-identical objects, we show that revenue equivalence applies.Keywords Sequential first-price auctions · Revenue equivalence · Endogenous outside options · Procurement auction · Capacity constraintsWe thank Werner Güth and Ulf Schiller for helpful comments and stimulating discussions. The paper greatly benefited from very helpful comments of the associate editor and two reviewers. We gratefully acknowledge comments from

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Section: Discussionmentioning

confidence: 70%

Section: Introductionmentioning

confidence: 60%

First-price equilibrium and revenue equivalence in a sequential procurement auction model

Reiss

Schöndube

2008

Econ Theory

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“…11 The results are presented in Table 7. If subjects followed the theory, both the Value and Constant coefficients would be 0.…”

Section: Overbiddingmentioning

confidence: 99%

“…In F, it is the result of a steeper bidding function than predicted by theory, which is reflected in the positive coefficient of Value. In S, it is due to a higher bid than 11 We provide a detailed descriptive analysis of overbidding behavior in Appendix D. 2. optimal for all valuations, as reflected by the positive coefficient of Constant. In each mechanism, overbidding is also significantly less prevalent in later goods (G3 in F and G2 and G3 in S).…”

Section: Overbiddingmentioning

confidence: 99%

“…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]. In all this literature, however, valuations for all goods are known at the outset.…”

Section: Introductionmentioning

confidence: 99%

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Sequential Auctions with Capacity Constraints: An Experimental Investigation

Otamendi

Brocas

Carrillo

2018

Games

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Abstract:We conduct a laboratory experiment where groups of 4 subjects constrained to obtain at most one good each, sequentially bid for three goods in first and second price auctions. Subjects learn at the beginning of each auction their valuation for the good and exit the auction once they have obtained one good. We show that, contrary to equilibrium predictions, subjects' bidding behavior is excessively similar across units and across mechanisms at the aggregate level. We provide two (complementary) explanations for these departures. One is bounded rationality. Subjects do not fully comprehend subtle differences between mechanisms. The other is self-selection. Subjects are very heterogeneous and some of them deviate more from equilibrium than others. Since deviations take mostly the form of overbidding, these subjects win the first or second good and exit the auction, leaving those who play closer to theoretical predictions to bid for the third good. Support for this hypothesis comes from the documented higher bidding, lower efficiency and lower profits associated with the first and second unit compared to the third one.

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Multiunit Auctions

Kwasnica

Sherstyuk

2013

A Collection of Surveys on Market Experiments

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We survey experimental research on multi-unit auctions with an emphasis on topics that may be of a unifying interest to experimental, as well as theoretical and empirical economists. Topics include static and dynamic multi-unit auctions; combinatorial auctions and efficient auction design; simultaneous and sequential auctions; bidder asymmetry and endogenous entry, and collusion in auctions. We also discuss behavioral regularities observed in multi-unit auction experiments.

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Entry decisions and bidding behavior in sequential first-price procurement auctions: An experimental study

Cited by 43 publications

References 18 publications

First-price equilibrium and revenue equivalence in a sequential procurement auction model

First-price equilibrium and revenue equivalence in a sequential procurement auction model

Sequential Auctions with Capacity Constraints: An Experimental Investigation

Multiunit Auctions

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