Multi-Object Auctions with Package Bidding: An Experimental Comparison of Vickrey and iBEA

Posted: 29 Nov 2009 Last revised: 29 Apr 2010

See all articles by Yan Chen

Yan Chen

University of Michigan at Ann Arbor - Department of Economics

Kan Takeuchi

Hitotsubashi University

Date Written: March 2010

Abstract

The use of package auctions for complex resource allocation has been rapidly increasing in recent years. In this paper, we study two package auction mechanisms in a laboratory setting, a sealed bid Vickrey auction and an ascending version of Vickrey, the iBEA auction. Unlike the single-unit Vickrey auction, where bidders tend to overbid in the laboratory, most of our bidders either underbid or bid their true values. Furthermore, at the aggregate level, while the Vickrey auction generates significantly higher revenue than does iBEA, the iBEA auction generates significantly higher bidder profit and efficiency. Additionally, a significantly larger proportion of iBEA auctions achieves 100% efficiency than does the Vickrey auction. We also find that human bidders learn from their robot opponents when the robot strategies are (myopic) best responses.

Keywords: Combinatorial auctions, iBEA auction, Experimental economics

JEL Classification: C91, D44

Suggested Citation

Chen, Yan and Takeuchi, Kan, Multi-Object Auctions with Package Bidding: An Experimental Comparison of Vickrey and iBEA (March 2010). Games and Economic Behavior, Vol. 68, No. 2, pp.557-579, Available at SSRN: https://ssrn.com/abstract=1491934

Yan Chen

University of Michigan at Ann Arbor - Department of Economics ( email )

611 Tappan Street
Ann Arbor, MI 48109-1220
United States

Kan Takeuchi (Contact Author)

Hitotsubashi University ( email )

2-1 Naka Kunitachi-shi
Tokyo 186-8601
Japan

HOME PAGE: http://www.econ.hit-u.ac.jp/~kan/

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