Competition and Cooperation in Divisible Good Auctions: An Experimental Examination

60 Pages Posted: 13 Aug 2004

See all articles by Orly Sade

Orly Sade

Hebrew University of Jerusalem - Department of Finance

Charles R. Schnitzlein

School of Business, University of Vermont

Jaime F. Zender

University of Colorado at Boulder - Department of Finance

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Date Written: March 15, 2004

Abstract

An experimental approach is used to examine the performance of three different multi-unit auction designs: discriminatory, uniform-price with fixed supply, and uniform-price with endogenous supply. We find that the strategies of the individual bidders and the aggregate demand curves are inconsistent with theoretically identified equilibrium strategies. The discriminatory auction is found to be more susceptible to collusion than are the uniform-price auctions, and so contrary to theoretical predictions and previous experimental results, the discriminatory auction provides the lowest average revenue. Consistent with theoretical predictions, bidder demands are more elastic with reducible supply or discriminatory pricing than in the uniform-price auction with fixed supply. Despite a lack of a priori differences across bidders, the discriminatory auction results in significantly more symmetric allocations.

Suggested Citation

Sade, Orly and Schnitzlein, Charles R. and Zender, Jaime F., Competition and Cooperation in Divisible Good Auctions: An Experimental Examination (March 15, 2004). Available at SSRN: https://ssrn.com/abstract=564883 or http://dx.doi.org/10.2139/ssrn.564883

Orly Sade (Contact Author)

Hebrew University of Jerusalem - Department of Finance ( email )

Mount Scopus
Jerusalem, 91905
Israel
972 2 588 3227 (Phone)

Charles R. Schnitzlein

School of Business, University of Vermont ( email )

Burlington, VT 05405
United States
802-656-9281 (Phone)

Jaime F. Zender

University of Colorado at Boulder - Department of Finance ( email )

Boulder, CO 80309
United States
303-554-1665 (Phone)
303-492-4689 (Fax)

HOME PAGE: http://www-bus.colorado.edu/faculty/Zender/

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