Multiple Item, Ascending Price Auctions: An Experimental Examination of Alternative Auction Sequences

42 Pages Posted: 25 Apr 2015

See all articles by Dae Kim

Dae Kim

California Institute of Technology

Hsing Lee

California Institute of Technology

Travis Maron

California Institute of Technology - Division of the Humanities and Social Sciences

Charles R. Plott

California Institute of Technology - Division of the Humanities and Social Sciences

Ruijie Teo

California Institute of Technology

Date Written: April 18, 2015

Abstract

The paper investigates the revenue and efficiency of different ascending price auction architectures for the sale of three items and five bidders. Four architectures are studied: two different sequences of single item auctions, simultaneous auctions with a common countdown clock, and simultaneous auctions with item specific countdown clocks. A countdown clock measures the time until the auction closes but resets with each new bid. The environment contains independent private values, no uncertainty about own preferences, no information about other’s preferences, and a one unit budget constraint. The Nash equilibrium best response with straight forward bidding fits both dynamic and outcome data well but the Marshallian dynamic is also evident in the adjustment speeds. When non-unique Nash equilibria exist as in the case of simultaneous markets with a common clock, the social value maximizing Nash equilibrium emerges as the equilibrium selection. Both total revenue and efficiencies depend on the architecture as predicted by the Nash model, with the exception of the independent clocks architecture, which performs poorly on all dimensions.

Keywords: Multi-Item Auction, Experiment, Auction Sequence, Ascending Price Design

Suggested Citation

Kim, Dae and Lee, Hsing and Maron, Travis and Plott, Charles R. and Teo, Ruijie, Multiple Item, Ascending Price Auctions: An Experimental Examination of Alternative Auction Sequences (April 18, 2015). Available at SSRN: https://ssrn.com/abstract=2596318 or http://dx.doi.org/10.2139/ssrn.2596318

Dae Kim

California Institute of Technology ( email )

Pasadena, CA 91125
United States

Hsing Lee

California Institute of Technology ( email )

Pasadena, CA 91125
United States

Travis Maron

California Institute of Technology - Division of the Humanities and Social Sciences ( email )

1200 East California Blvd.
Pasadena, CA 91125
United States

Charles R. Plott (Contact Author)

California Institute of Technology - Division of the Humanities and Social Sciences ( email )

1200 East California Blvd.
337 Baxter Hall
Pasadena, CA 91125
United States
626-395-4209 (Phone)

Ruijie Teo

California Institute of Technology ( email )

Pasadena, CA 91125
United States

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