IDEAS home Printed from https://ideas.repec.org/a/wly/soecon/v82y2016i3p760-780.html
   My bibliography  Save this article

Seller Beware: Supply and Demand Reduction and Price Manipulation in Multiple‐Unit Uniform Price Auctions

Author

Listed:
  • Abel M. Winn
  • Michael L. Parente
  • David Porter

Abstract

We experimentally compare under‐revelation of supply and demand across alternative variations of ascending and descending two‐sided price clock auctions. We find that buyers reduce demand more when the price is ascending but sellers’ behavior is consistent across clock directions. As a result, the clock price rule has empirical effects on efficiency even though it is theoretically neutral.

Suggested Citation

  • Abel M. Winn & Michael L. Parente & David Porter, 2016. "Seller Beware: Supply and Demand Reduction and Price Manipulation in Multiple‐Unit Uniform Price Auctions," Southern Economic Journal, John Wiley & Sons, vol. 82(3), pages 760-780, January.
    • Handle: RePEc:wly:soecon:v:82:y:2016:i:3:p:760-780
    DOI: 10.1002/soej.12086
    as

    Download full text from publisher

    File URL: https://doi.org/10.1002/soej.12086
    Download Restriction: no
    File URL: https://libkey.io/10.1002/soej.12086?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. M. Vittoria Levati & Tibor Neugebauer, 2004. "An Application of the English Clock Market Mechanism to Public Goods Games," Experimental Economics, Springer;Economic Science Association, vol. 7(2), pages 153-169, June.
    2. Davis, Douglas D. & Holt, Charles A., 2008. "The Exercise of Market Power in Laboratory Experiments," Handbook of Experimental Economics Results, in: Charles R. Plott & Vernon L. Smith (ed.), Handbook of Experimental Economics Results, edition 1, volume 1, chapter 17, pages 138-145, Elsevier.
    3. Marco Pagano, 1989. "Endogenous Market Thinness and Stock Price Volatility," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 56(2), pages 269-287.
    4. McCabe, Kevin A & Rassenti, Stephen J & Smith, Vernon L, 1990. "Auction Institutional Design: Theory and Behavior of Simultaneous Multiple-Unit Generalizations of the Dutch and English Auctions," American Economic Review, American Economic Association, vol. 80(5), pages 1276-1283, December.
    5. Daniel Kahneman & Amos Tversky, 2013. "Prospect Theory: An Analysis of Decision Under Risk," World Scientific Book Chapters, in: Leonard C MacLean & William T Ziemba (ed.), HANDBOOK OF THE FUNDAMENTALS OF FINANCIAL DECISION MAKING Part I, chapter 6, pages 99-127, World Scientific Publishing Co. Pte. Ltd..
    6. Porter, David & Rassenti, Stephen & Shobe, William & Smith, Vernon & Winn, Abel, 2009. "The design, testing and implementation of Virginia's NOx allowance auction," Journal of Economic Behavior & Organization, Elsevier, vol. 69(2), pages 190-200, February.
    7. Richard Engelbrecht-Wiggans & John A. List & David H. Reiley, 2006. "Demand Reduction In Multi-Unit Auctions With Varying Numbers Of Bidders: Theory And Evidence From A Field Experiment ," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 47(1), pages 203-231, February.
    8. Vernon L. Smith, 1962. "An Experimental Study of Competitive Market Behavior," Journal of Political Economy, University of Chicago Press, vol. 70(2), pages 111-111.
    9. Amos Tversky & Daniel Kahneman, 1991. "Loss Aversion in Riskless Choice: A Reference-Dependent Model," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 106(4), pages 1039-1061.
    10. David Lucking-Reiley & John A. List, 2000. "Demand Reduction in Multiunit Auctions: Evidence from a Sportscard Field Experiment," American Economic Review, American Economic Association, vol. 90(4), pages 961-972, September.
    11. Alsemgeest, Paul & Noussair, Charles & Olson, Mark, 1998. "Experimental Comparisons of Auctions under Single- and Multi-Unit Demand," Economic Inquiry, Western Economic Association International, vol. 36(1), pages 87-97, January.
    12. Corinne Bronfman & Kevin McCabe & David Porter & Stephen Rassenti & Vernon Smith, 1996. "An Experimental Examination of the Walrasian Tatonnement Mechanism," RAND Journal of Economics, The RAND Corporation, vol. 27(4), pages 681-699, Winter.
    13. Kagel, John H & Levin, Dan, 2001. "Behavior in Multi-unit Demand Auctions: Experiments with Uniform Price and Dynamic Vickrey Auctions," Econometrica, Econometric Society, vol. 69(2), pages 413-454, March.
    14. David Porter & Roumen Vragov, 2006. "An experimental examination of demand reduction in multi-unit versions of the Uniform-price, Vickrey, and English auctions," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 27(6), pages 445-458.
    15. McCabe, Kevin A & Rassenti, Stephen J & Smith, Vernon L, 1992. "Designing Call Auction Institutions: Is Double Dutch the Best?," Economic Journal, Royal Economic Society, vol. 102(410), pages 9-23, January.
    16. Douglas D. Davis & Charles A. Holt, 1994. "Market Power and Mergers in Laboratory Markets with Posted Prices," RAND Journal of Economics, The RAND Corporation, vol. 25(3), pages 467-487, Autumn.
    17. Banks, Jeffrey & Olson, Mark & Porter, David & Rassenti, Stephen & Smith, Vernon, 2003. "Theory, experiment and the federal communications commission spectrum auctions," Journal of Economic Behavior & Organization, Elsevier, vol. 51(3), pages 303-350, July.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Haoran He & Yefeng Chen, 2021. "Auction mechanisms for allocating subsidies for carbon emissions reduction: an experimental investigation," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 57(2), pages 387-430, August.
    2. Yiakoumi, Despina & Rouaix, Agathe & Phimister, Euan, 2022. "Evaluating capacity auction design for electricity: An experimental analysis," Energy Economics, Elsevier, vol. 115(C).
    3. Dirk Engelmann & Veronika Grimm, 2003. "Bidding Behavior in Multi-Unit Auctions - An Experimental Investigation and some Theoretical Insights," CERGE-EI Working Papers wp210, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
    4. Dirk Engelmann & Veronika Grimm, 2009. "Bidding Behaviour in Multi-Unit Auctions - An Experimental Investigation," Economic Journal, Royal Economic Society, vol. 119(537), pages 855-882, April.
    5. Sherstyuk, Katerina, 2008. "Some Results on Anti-Competitive Behavior in Multi-Unit Ascending Price Auctions," Handbook of Experimental Economics Results, in: Charles R. Plott & Vernon L. Smith (ed.), Handbook of Experimental Economics Results, edition 1, volume 1, chapter 23, pages 185-198, Elsevier.
    6. Anthony M. Kwasnica & Katerina Sherstyuk, 2013. "Multiunit Auctions," Journal of Economic Surveys, Wiley Blackwell, vol. 27(3), pages 461-490, July.
    7. Christopher M. Anderson & Daniel S. Holland, 2006. "Auctions for Initial Sale of Annual Catch Entitlement," Land Economics, University of Wisconsin Press, vol. 82(3), pages 333-352.
    8. Porter, David & Rassenti, Stephen & Shobe, William & Smith, Vernon & Winn, Abel, 2009. "The design, testing and implementation of Virginia's NOx allowance auction," Journal of Economic Behavior & Organization, Elsevier, vol. 69(2), pages 190-200, February.
    9. Alexander Elbittar & Andrei Gomberg, 2007. "Uniform-Price Auctions without Exogenous Uncertainty: An experimental study," Working Papers DTE 404, CIDE, División de Economía.
    10. List John A., 2007. "Field Experiments: A Bridge between Lab and Naturally Occurring Data," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 6(2), pages 1-47, April.
    11. Schnitzlein, Charles R. & Shao, Minjie, 2013. "Capacity constraints and the winner's curse in multi-unit common value auctions," The Quarterly Review of Economics and Finance, Elsevier, vol. 53(2), pages 188-201.
    12. Pagnozzi, Marco & Saral, Krista Jabs, 2013. "Multi-Object Auctions with Resale: An Experimental Analysis," MPRA Paper 43665, University Library of Munich, Germany.
    13. Marco Pagnozzi & Krista J. Saral, 2015. "Demand Reduction in Multi-Object Auctions with Resale: An Experimental Analysis," CSEF Working Papers 416, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
    14. Ping Zhang, 2009. "Characterization of Pure Strategy Equilibria in Uniform Price IPO Auctions," Discussion Papers 2009-05, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
    15. Raphaële Préget & Sophie Thoyer, 2009. "Multi-Unit Auctions and Competition Stricture," Working Papers 09-18, LAMETA, Universtiy of Montpellier, revised Dec 2009.
    16. Manelli, Alejandro M. & Sefton, Martin & Wilner, Benjamin S., 2006. "Multi-unit auctions: A comparison of static and dynamic mechanisms," Journal of Economic Behavior & Organization, Elsevier, vol. 61(2), pages 304-323, October.
    17. Ping Zhang, 2009. "Characterization of Pure Strategy Equilibria in Uniform Price IPO Auctions," Discussion Papers 2009-05, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
    18. Ahlberg , Joakim, 2012. "Multi-unit common value auctions: a laboratory experiment with three sealed-bid mechanisms," Working papers in Transport Economics 2012:23, CTS - Centre for Transport Studies Stockholm (KTH and VTI).
    19. Roberto Savona & Maxence Soumare & Jørgen Vitting Andersen, 2015. "Financial Symmetry and Moods in the Market," PLOS ONE, Public Library of Science, vol. 10(4), pages 1-21, April.
    20. Kimbrough, Erik O. & Smyth, Andrew, 2018. "Testing the boundaries of the double auction: The effects of complete information and market power," Journal of Economic Behavior & Organization, Elsevier, vol. 150(C), pages 372-396.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wly:soecon:v:82:y:2016:i:3:p:760-780. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://doi.org/10.1002/(ISSN)2325-8012 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.