Premium Auctions in the Field
Tinbergen Institute Discussion Paper 2017-024/VII
20 Pages Posted: 21 Feb 2017
Date Written: February 15, 2017
In a field experiment, we study the revenue-generating properties of premium auctions. In a premium auction, the runner-up obtains a premium for driving up the price paid by the winner. Previous research, both theoretical and in the lab, has shown that the relative performance of premium auctions compared to standard auction formats is context-specific. In the experiment, we compare two types of premium auctions with the standard Vickrey auction selling high-quality, limited-edition posters in an online auction. We observe that neither premium auction raises higher revenue than the Vickrey auction. The variance of the revenue in the Amsterdam auction, one of the premium auctions, is lower than that in the Vickrey auction.
Keywords: Premium auctions, field experiment
JEL Classification: C93, D44
Suggested Citation: Suggested Citation