| Author: | Avery, C. Kagel, J. H. |
| Title: | Second-Price Auctions with Asymmetric Payoffs: An Experimental Investigation |
| Journal: | Journal of Economics and Management Strategy
1997 : Vol. 6:3, p. 573-603 |
| Index terms: | BIDDING EQUILIBRIUM THEORY PRICES |
| Language: | eng |
| Abstract: | A series of two-player, second-price common-value auctions are reported. In symmetric auctions, bidders suffer from a winner's curse. In asymmetric auctions in which one bidder has a private value advantage, the effect on bids and prices is proportionally rather than explosive (the prediction of Nash equilibrium bidding theory). Although advantaged bidders are close to making best responses to disadvantaged bidders, the latter bid much more aggressively than in equilibrium, thereby earning negative average profits. Experienced bidders consistently bid closer to the Nash equilibrium than inexperienced bidders, although these adjustments towards equilibrium are small and at times uneven. |
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