Signalling in Auctions: Experimental Evidence
38 Pages Posted: 20 Apr 2021
Date Written: 2021
We study the relative performance of the first-price sealed-bid auction, the second-price sealed-bid auction, and the all-pay sealed-bid auction in a laboratory experiment where bidders can signal information through their bidding behaviour to an outside observer. We consider two different information settings: the auctioneer reveals either the identity of the winning bidder only, or she also reveals the bidders’ payments to an outside observer. We find that the all-pay sealed-bid auction in which the bidders’ payments are revealed outperforms the other mechanisms in terms of revenue, while this mechanism underperforms in terms of efficiency relative to the winner-pay auctions.
Keywords: Auctions, Signalling, Experiments
JEL Classification: C92, D44, D82
Suggested Citation: Suggested Citation