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SFB 504 discussion paper No. 00-10:

An experimental analysis of auctions with interdependent valuations

Oliver Kirchkamp and Benny Moldovanu

Abstract:

We study experiments in an auction setting with interdependent valuation. Groups of three players receive private signals and then bid for a single, indivisible item. Valuations for the item differ within groups and depend asymmetrically on a bidder's own and other bidders' signals. Theoretically, the English auction yields efficient allocations, while other standard auction formats fail to do so.

Consistent with equilibrium predictions, we find that an English Auction yields significantly more efficiency than a second price sealed bid auction.

We also study the seller's expected revenue and the bidders expected payoff, and find that the experimental results are close to the theoretical predictions. (JEL C92, D44)


On 20 December 2001 the paper has been accepted for publication in Games and Economic Behavior. It appeared in 2004 (sic!), Vol 48/1, pp. 54-85