John Asker (New York University’s Leonard N. Stern School of Business) Brit Grosskopf (Texas A&M University) C. Nicholas McKinney () (Rhodes College) Muriel Niederle (Stanford University) Alvin E. Roth (Department of Economics at Harvard University and Harvard Business School) Georg Weizsäcker (London School of Economics)
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The authors present an experimental design used to teach concepts in the economics of auctions and implications for e-Business procurement. The experiment is easily administered and can be adapted to many different treatments. The chief innovation is that it does not require the use of a lab or class time. Instead, the design can be implemented on any of the many Web-based auction sites (we use Yahoo!). This design has been used to demonstrate how information is transmitted by bids in an auction and how this can make it difficult for well-informed bidders to profit from their information, leading to disincentives for relatively informed bidders to enter an auction. Consequently, an auction may sometimes be an ineffective mechanism for procurement, compared with other options. The auction experiment shows how information can dramatically affect market outcomes and bidder incentives.
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Find related papers by JEL classification: A2 - General Economics and Teaching - - Economic Education and Teaching of Economics C9 - Mathematical and Quantitative Methods - - Design of Experiments D44 - Microeconomics - - Market Structure and Pricing - - - Auctions
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