Home-grown values and incentive compatible auction design |
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Authors: | E Elisabet Rutström |
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Institution: | (1) Department of Economics, College of Business Administration, University of South Carolina, Columbia, SC 29208, USA (e-mail: Elisabet@worldnet.att.net), US |
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Abstract: | The behavioral properties of several auctions designed to elicit individual valuations for an object are studied using controlled
laboratory experiments. Our experiments lead us to conclude that there are some behavioral differences between alternative incentive-compatible institutions for eliciting home-grown values, contrary
to the theoretical expectation that these institutions are isomorphic. These results are consistent with earlier experimental
results using induced values. The most important finding is that English auctions appear to elicit lower bids than Vickrey
auctions, after controlling for observable socio-economic characteristics. Moreover, English auction bids also exhibit significantly
less residual variance and may be sensitive to the number of rival bidders. It appears that the real-time learning allowed
in the English auction significantly affects subject behavior. We also find that values elicited with the Becker, DeGroot
and Marshak institution differ from those in both English and Vickrey auctions.
Received November 1993/Final version May 1995 |
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Keywords: | : Auctions English auctions Vickrey auctions value elicitation experiments |
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