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Vickrey auction vs BDM: difference in bidding behaviour and the impact of other-regarding motives

Author

Listed:
  • Niall Flynn

    (Innsbruck University)

  • Christopher Kah

    (Innsbruck University)

  • Rudolf Kerschbamer

    (Innsbruck University)

Abstract

In an experiment, we first elicit the distributional preferences of subjects and then let them bid for a lottery, either in a Becker–DeGroot–Marschak (BDM) mechanism or a Vickrey auction (VA). The standard theory predicts that altruistic subjects underbid in the VA—compared to the BDM—while spiteful subjects overbid in the VA. The data do not confirm those predictions. While we observe aggregate underbidding in the VA, the result is not driven by the choices of altruistic subjects.

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  • Niall Flynn & Christopher Kah & Rudolf Kerschbamer, 2016. "Vickrey auction vs BDM: difference in bidding behaviour and the impact of other-regarding motives," Journal of the Economic Science Association, Springer;Economic Science Association, vol. 2(2), pages 101-108, November.
    • Handle: RePEc:spr:jesaex:v:2:y:2016:i:2:d:10.1007_s40881-016-0027-5
    DOI: 10.1007/s40881-016-0027-5
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    Cited by:

    1. Kerschbamer, Rudolf & Müller, Daniel, 2020. "Social preferences and political attitudes: An online experiment on a large heterogeneous sample," Journal of Public Economics, Elsevier, vol. 182(C).
    2. Alexis Rulisa & Luuk Kempen & Dirk-Jan Koch, 2023. "Exploring willingness-to-pay for ‘malaria-free’ rice among rural consumers in Rwanda: examining the potential for a local voluntary standard," Agricultural and Food Economics, Springer;Italian Society of Agricultural Economics (SIDEA), vol. 11(1), pages 1-27, December.
    3. Björn Bartling & Tobias Gesche & Nick Netzer, 2017. "Does the absence of human sellers bias bidding behavior in auction experiments?," Journal of the Economic Science Association, Springer;Economic Science Association, vol. 3(1), pages 44-61, July.
    4. Rosato, Antonio & Tymula, Agnieszka A., 2024. "A novel experimental test of truthful bidding in second-price auctions with real objects," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 111(C).
    5. Maximilian Spath, 2023. "The qualitative accuracy of the Becker-DeGroot-Marshak method," Papers 2302.04055, arXiv.org.
    6. Maurizio Canavari & Andreas C. Drichoutis & Jayson L. Lusk & Rodolfo M. Nayga, Jr., 2018. "How to run an experimental auction: A review of recent advances," Working Papers 2018-5, Agricultural University of Athens, Department Of Agricultural Economics.
    7. Daniele Asioli & Adriana Mignani & Frode Alfnes, 2021. "Quick and easy? Respondent evaluations of the Becker–DeGroot–Marschak and multiple price list valuation mechanisms," Agribusiness, John Wiley & Sons, Ltd., vol. 37(2), pages 215-234, April.
    8. Jaber-Lopez Tarek & Baier Alexandra & Davis Brent J., 2021. "In-group, out-group effects in distributional preferences: the case of gender," German Economic Review, De Gruyter, vol. 22(2), pages 199-214, May.

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    More about this item

    Keywords

    Distributional preferences; BDM; Vickrey auction;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games

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