On the Effects of Joint Bidding in Independent Private Value Auctions: An Experimental Study

How Accurately Do Structural Asymmetric First-Price Auction Estimates Represent True Valuations?

“…Note that our laboratory procedures in Figure 1 can be viewed as a miniature hypothetical wildcat auction, in which both (non-collusive) individual and joint bids are permitted and the auctioneer randomly determines whether or not to allow a joint bid. One of the conclusions in Chernomaz (2012) is that qualitatively bidders follow theoretical predictions by changing their bidding behavior between symmetric and asymmetric environments. Additionally, bidders with the weaker (solo) valuation distribution tend to be pointwise more aggressive, as the theory predicts.…”

“…To avoid any resulting issues, such as discrepancies in bid distributions and bidders' risk averse attitudes in structural estimations, we omit this experiment run from our analyses. See page 708 of Chernomaz (2012) for details.…”

“…The three-bidder case is only one of the treatments in the within-subjects designs of both studies. In the other treatments of Bajari and Hortaçsu (2005), the bids are expected to be relatively higher due to an increased number of bidders, while in the other treatments of Chernomaz (2012) bids are expected to be relatively lower due to a reduced number of bidders. The difference in overbidding under different treatments is also consistent with the idea that subjects' bidding errors would be biased in the predicted direction of the additional treatments.…”

“…Specifically, we use a dataset from the asymmetric private value first-price auctions experiment conducted by Chernomaz (2012). The data contains bids and laboratory-assigned valuations for each bidder.…”

“…The data contains bids and laboratory-assigned valuations for each bidder. Additionally, Chernomaz (2012) investigates the effects caused by asymmetry among bidders under exogenously changing auction environments, while the majority of bidder valuations remain fixed before and after such exogenous predictions of Markov-perfect dynamic oligopoly models. 4 The history is as follows: based on the cornerstone work of Guerre, Perrigne, and Vuong (2000) that proposes a nonparametric method for symmetric first-price auctions with risk neutral bidders, Campo, Perrigne, and Vuong (2003) extend the nonparametric estimation method to asymmetric auctions.…”