Divisible Good Auctions with Asymmetric Information: An Experimental Examination
55 Pages
Posted: 14 Jul 2012
Last revised: 12 Nov 2012
The University of Texas at Arlington
Hebrew University of Jerusalem - Department of Finance
School of Business, University of Vermont
University of Colorado at Boulder - Department of Finance
Date Written: May 14, 2012
Abstract
An experimental approach is used to compare bidding behavior and auction performance in uniform-price and discriminatory auctions when there is incomplete information concerning the common value of the auctioned good. In a symmetric information environment, the different auction formats provide the same average revenue. However, when information is asymmetric the discriminatory auction results in higher average revenue than the uniform-price auction. The volatility of revenue is higher in the uniform-price auctions in all treatments. The results, therefore, provide support for the use of the discriminatory format. Subject characteristics and measures of experience in recent auctions are found to be useful in explaining bidding behavior.
Keywords: Divisible Good Auctions, Pricing Mechanism Performance, Information Environment, Bidding Behavior
JEL Classification: C52, C72, C91, D44, D81, D82
Suggested Citation:
Suggested Citation
Morales-Camargo, Emmanuel and Sade, Orly and Schnitzlein, Charles R. and Zender, Jaime F., Divisible Good Auctions with Asymmetric Information: An Experimental Examination (May 14, 2012). Journal of Financial and Quantitative Analysis (JFQA), Forthcoming. Available at SSRN: https://ssrn.com/abstract=1262474
