Time is Money: The Effect of Clock Speed on Seller's Revenue in Dutch Auctions

28 Pages Posted: 28 Mar 2005

See all articles by Elena Katok

Elena Katok

University of Texas at Dallas

Anthony M. Kwasnica

Smeal College of Business

Date Written: July 17, 2003

Abstract

This study examines the role of timing in auctions under the premise that time is a valuable resource. When one object is for sale, Dutch and first-price sealed bid auctions are strategically equivalent in standard models, and therefore, they should yield the same revenue for the auctioneer. We study Dutch and first-price sealed bid auctions in the laboratory, with a specific emphasis on the speed of the clock in the Dutch auction. At fast clock speeds revenue in the Dutch auction is significantly lower than the sealed bid auction. When the clock is sufficiently slow, however, revenue in the Dutch auction is greater than the revenue in the sealed bid auction. We develop and test a simple model of auctions with impatient bidders that helps to reconcile prior findings in both the laboratory and the field.

Keywords: Auctions, experimental economics

JEL Classification: D44, C91

Suggested Citation

Katok, Elena and Kwasnica, Anthony Mark, Time is Money: The Effect of Clock Speed on Seller's Revenue in Dutch Auctions (July 17, 2003). Available at SSRN: https://ssrn.com/abstract=673527 or http://dx.doi.org/10.2139/ssrn.673527

Elena Katok (Contact Author)

University of Texas at Dallas ( email )

Jindal School of Management
800 W. Campbell Dr.
Richardson, TX 75080
United States

HOME PAGE: http://www.utdallas.edu/~ekatok/

Anthony Mark Kwasnica

Smeal College of Business ( email )

Department of Risk Management
332 Business Building
University Park, PA 16802-3306
United States

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