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Obviousness around the clock

Author

Listed:
  • Yves Breitmoser

    (Bielefeld University)

  • Sebastian Schweighofer-Kodritsch

    (Humboldt-Universität zu Berlin)

Abstract

Li (Am Econ Rev 107(11):3257–3287, 2017) introduces a theoretical notion of obviousness of a dominant strategy, to be used as a refinement in mechanism design. This notion is supported by experimental evidence that bidding is closer to dominance in the dynamic ascending-clock auction than the static second-price auction (private values), noting that dominance is theoretically obvious in the former but not the latter. We replicate his experimental study and add three intermediate auction formats that decompose the designs’ differences to quantify the cumulative effects of (1) simply seeing an ascending-price clock (after bid submission), (2) bidding dynamically on the clock, and (3) getting (theoretically irrelevant) drop-out information about other bidders. The theory predicts dominance to become obvious through (2), dynamic bidding. We find no significant behavioral effect of (2), however, while the feedback effects (1) and (3) are highly significant. We conclude that behavioral differences between second-price and ascending-clock auctions offer rather limited support for the theory of obviousness and that framing has surprisingly large potential in mechanism design.

Suggested Citation

  • Yves Breitmoser & Sebastian Schweighofer-Kodritsch, 2022. "Obviousness around the clock," Experimental Economics, Springer;Economic Science Association, vol. 25(2), pages 483-513, April.
  • Handle: RePEc:kap:expeco:v:25:y:2022:i:2:d:10.1007_s10683-021-09720-z
    DOI: 10.1007/s10683-021-09720-z
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    1. Oechssler, Jörg & Roomets, Alex, 2023. "Dissolving an ambiguous partnership," Working Papers 0733, University of Heidelberg, Department of Economics.
    2. Alexander L. Brown & Daniel G. Stephenson & Rodrigo A. Velez, 2024. "Testing the simplicity of strategy-proof mechanisms," Papers 2404.11883, arXiv.org.
    3. Yannai A. Gonczarowski & Ori Heffetz & Guy Ishai & Clayton Thomas, 2024. "Describing Deferred Acceptance and Strategyproofness to Participants: Experimental Analysis," Papers 2409.18166, arXiv.org.
    4. Shengwu Li, 2024. "Designing Simple Mechanisms," Papers 2403.18694, arXiv.org, revised Jul 2024.
    5. Yannai A. Gonczarowski & Ori Heffetz & Clayton Thomas, 2022. "Strategyproofness-Exposing Mechanism Descriptions," Papers 2209.13148, arXiv.org, revised Jul 2023.

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    More about this item

    Keywords

    Experiments; Private value auctions; Strategy-proofness; Obviousness;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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