Multi-Object Auctions with Resale: An Experimental Analysis

Abstract

We analyze the e¤ects of resale through bargaining in multi-object uniform-price auctions with asymmetric bidders. The possibility of resale a¤ects bidders'strategies, and hence the allocation of the objects on sale and the seller's revenue. Our experimental design consists of four treatments: one without resale and three resale treatments that vary both the bargaining mechanism and the amount of information available in the resale market. As predicted by theory: (i) without resale, asymmetry among bidders reduces demand reduction; (ii) resale increases demand reduction by high-value bidders; (iii) low-value bidders speculate by bidding more aggressively with resale. Therefore, resale induces speculation and demand reduction which reduce auction e¢ ciency. In contrast to what is usually argued, resale does not necessarily increase …nal e¢ ciency and may not reduce the seller's revenue. Features of the resale market that tend to increase its e¢ ciency also reduce the seller's revenue.JEL Classi…cation: D44, C90.

An Experimental Investigation of Procurement Auctions with Asymmetric Sellers

“…Our research setting differs from theirs as they do not consider the competitive effects of more than two sellers or compare auction mechanisms for two bidders. Pagnozzi and Saral (2013) also consider two asymmetric cost sellers in their experimental investigation, but their setting is a multi‐object auction with resale. In addition, there is also a literature on procurement auctions in which products are differentiated on non‐price attributes (Engelbrecht‐Wiggans and Katok 2006, Engelbrecht‐Wiggans et al 2007, Fugger et al 2015, Haruvy and Katok 2013, Shachat and Swarthout 2010) All of these studies feature bidders with symmetric costs (i.e., seller costs are drawn from a common distribution).…”

Multi-object auctions with resale: Theory and experiment

“…Georganas (2011) experimentally studies symmetric English auctions with resale and shows deviations from equilibrium that he interprets as misperception of resale. The only other paper, to the best of our knowledge, studying a multi-object setting with resale possibility is Pagnozzi and Jabs-Saral (2013). Their paper complements ours as they analyze different bargaining mechanisms at resale stage following a uniform price auction without complementarities.…”