Multi-good Demand in Bidder's Choice Auctions: Experimental Evidence from the Lab and the Field

Economic theory has shown that bidder’s choice auctions result in higher revenues than traditional good-by-good auctions, if bidders are risk-averse. Most theoretical and experimental work focuses on bidder’s choice auctions where bidders value only one of the available goods. We report results from lab and field experiments that examine multi-good demand, which is common in bidder’s choice auctions used in field settings. We also implement treatments that vary revelation of price. Information. We find that while price revelation does not have a significant effect on revenue, multi-good demand mutes the theoretical revenue superiority the bidder’s choice mechanism. This is consistent with the notion that the perceived risk of losing one’s most preferred good is softened when there is a chance to win other goods. This result implies that bidder’s choice auctions should be used in settings where each bidder is likely to strongly prefer one good over the others, though this need not be the same good for every bidder. Further, this work demonstrates the complementarities of the field and laboratory settings to answer questions which are not clearly resolved using only one setting.