Competition and Cooperation in Divisible Good Auctions: An Experimental Examination

Posted: 29 Feb 2008  

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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Abstract

An experimental approach is used to examine the performance of three different multiunit auction designs: discriminatory, uniform-price with fixed supply, and uniform-price with endogenous supply. We find the actual strategies to be inconsistent with theoretically identified equilibrium strategies. The discriminatory auction is found to be more susceptible to collusion than either uniform-price auction and so, contrary to theoretical predictions and previous experimental results, it generates the lowest average revenue. Consistent with theoretical predictions, the actual bid schedules are more elastic with reducible supply or discriminatory pricing than in the uniform-price auction with fixed supply.

Keywords: fetus, heart rate, prenatal environment, prenatal drug exposure, cigarette smoking

Suggested Citation

Sade, Orly and Schnitzlein, Charles R. and Zender, Jaime F., Competition and Cooperation in Divisible Good Auctions: An Experimental Examination. Review of Financial Studies, Vol. 19, No. 1, pp. 195-235, 2006. Available at SSRN: https://ssrn.com/abstract=900710

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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