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Divisible Good Auctions with Asymmetric Information: An Experimental Examination

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  • Morales-Camargo, Emmanuel
  • Sade, Orly
  • Schnitzlein, Charles
  • Zender, Jaime F.

Abstract

An experimental approach is used to compare bidding behavior and auction performance in uniform-price and discriminatory auctions when there is incomplete information concerning the common value of the auctioned good. In a symmetric information environment, the different auction formats provide the same average revenue. However, when information is asymmetric the discriminatory auction results in higher average revenue than the uniform-price auction. The volatility of revenue is higher in the uniform-price auctions in all treatments. The results, therefore, provide support for the use of the discriminatory format. Subject characteristics and measures of experience in recent auctions are found to be useful in explaining bidding behavior.

Suggested Citation

  • Morales-Camargo, Emmanuel & Sade, Orly & Schnitzlein, Charles & Zender, Jaime F., 2013. "Divisible Good Auctions with Asymmetric Information: An Experimental Examination," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 48(4), pages 1271-1300, August.
    • Handle: RePEc:cup:jfinqa:v:48:y:2013:i:04:p:1271-1300_00
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    Cited by:

    1. Kasberger, Bernhard & Woodward, Kyle, 2021. "Bidding in Multi-Unit Auctions under Limited Information," MPRA Paper 111185, University Library of Munich, Germany.
    2. Hadar Gafni & Dan Marom & Alicia Robb & Orly Sade, 0. "Gender Dynamics in Crowdfunding (Kickstarter): Evidence on Entrepreneurs, Backers, and Taste-Based Discrimination," Review of Finance, European Finance Association, vol. 25(2), pages 235-274.
    3. Mariño, Eduardo Anthony G. & Marszalec, Daniel, 2023. "Strategic supply management and mechanism choice in government debt auctions: An empirical analysis from the Philippines," Journal of Banking & Finance, Elsevier, vol. 154(C).

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