Signalling in Auctions: Experimental Evidence

38 Pages Posted: 20 Apr 2021

See all articles by Olivier Bos

Olivier Bos

Université Paris II - Panthéon-Assas

Francisco Gomez-Martinez

Universidad Carlos III Madrid

Sander Onderstal

University of Amsterdam; Tinbergen Institute

Tom Truyts

KU Leuven - Faculty of Business and Economics (FEB); Facultés Universitaires Saint Louis à Bruxelles; Catholic University of Louvain (UCL) - Center for Operations Research and Econometrics (CORE)

Multiple version iconThere are 2 versions of this paper

Date Written: 2021

Abstract

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

Bos, Olivier and Gomez-Martinez, Francisco and Onderstal, Sander and Truyts, Tom, Signalling in Auctions: Experimental Evidence (2021). ZEW - Centre for European Economic Research Discussion Paper No. 21-037, Available at SSRN: https://ssrn.com/abstract=3829833 or http://dx.doi.org/10.2139/ssrn.3829833

Olivier Bos (Contact Author)

Université Paris II - Panthéon-Assas ( email )

12 place du Pantheon
Paris cedex 06, 75231
France

Francisco Gomez-Martinez

Universidad Carlos III Madrid ( email )

CL. de Madrid 126
Madrid, Madrid 28903
Spain
+34694481107 (Phone)

HOME PAGE: http://www.eco.uc3m.es/personal/fragomez/

Sander Onderstal

University of Amsterdam ( email )

Roetersstraat 11
Amsterdam, 1018 WB
Netherlands

Tinbergen Institute ( email )

Burg. Oudlaan 50
Rotterdam, 3062 PA
Netherlands

Tom Truyts

KU Leuven - Faculty of Business and Economics (FEB) ( email )

Naamsestraat 69
Leuven, B-3000
Belgium

Facultés Universitaires Saint Louis à Bruxelles ( email )

Boulevard du Jardin Botanique 43
Bruxelles, 1000
Belgium

Catholic University of Louvain (UCL) - Center for Operations Research and Econometrics (CORE) ( email )

34 Voie du Roman Pays
B-1348 Louvain-la-Neuve, b-1348
Belgium

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