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Multi-Object Auctions with Resale: An Experimental Analysis

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  • Pagnozzi, Marco
  • Saral, Krista Jabs

Abstract

We analyze the effects of resale through bargaining in multi-object uniform-price auctions with asymmetric bidders. The possibility of resale affects bidders' strategies, and hence the allocation of the objects on sale and the seller's revenue. Our experimental design consists of four treatments: one without resale and three resale treatments that vary both the bargaining mechanism and the amount of information available in the resale market. As predicted by theory: (i) without resale, asymmetry among bidders reduces demand reduction; (ii) resale increases demand reduction by high-value bidders; (iii) low-value bidders speculate by bidding more aggressively with resale. Therefore, resale induces speculation and demand reduction which reduce auction efficiency. In contrast to what is usually argued, resale does not necessarily increase final efficiency and may not reduce the seller's revenue. Features of the resale market that tend to increase its efficiency also reduce the seller's revenue.

Suggested Citation

  • Pagnozzi, Marco & Saral, Krista Jabs, 2013. "Multi-Object Auctions with Resale: An Experimental Analysis," MPRA Paper 43665, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:43665
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    Cited by:

    1. Pagnozzi, Marco & Saral, Krista J., 2019. "Auctions with limited liability through default or resale," Journal of Economic Behavior & Organization, Elsevier, vol. 159(C), pages 51-74.
    2. Marco Pagnozzi & Krista J. Saral, 2019. "Entry by successful speculators in auctions with resale," Experimental Economics, Springer;Economic Science Association, vol. 22(2), pages 477-505, June.
    3. Pagnozzi, Marco & Saral, Krista J., 2019. "Efficiency in auctions with (failed) resale," Journal of Economic Behavior & Organization, Elsevier, vol. 159(C), pages 254-273.
    4. Filiz-Ozbay, Emel & Lopez-Vargas, Kristian & Ozbay, Erkut Y., 2015. "Multi-object auctions with resale: Theory and experiment," Games and Economic Behavior, Elsevier, vol. 89(C), pages 1-16.
    5. Isa Hafalir & Musab Kurnaz, 2019. "Discriminatory auctions with resale," Economic Theory Bulletin, Springer;Society for the Advancement of Economic Theory (SAET), vol. 7(2), pages 173-189, December.

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    More about this item

    Keywords

    multi-object auctions; resale; asymmetric bidders; bargaining; economic experiments;
    All these keywords.

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • C90 - Mathematical and Quantitative Methods - - Design of Experiments - - - General

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