Demand Reduction in Multi-Unit Auctions with Varying Numbers of Bidders: Theory and Evidence from a Field Experiment

29 Pages Posted: 21 Mar 2006

See all articles by Richard Engelbrecht-Wiggans

Richard Engelbrecht-Wiggans

University of Illinois at Urbana-Champaign - Department of Business Administration

John A. List

University of Chicago - Department of Economics; National Bureau of Economic Research (NBER); IZA Institute of Labor Economics

David Reiley

Pandora Media, Inc.; UC Berkeley School of Information

Abstract

Recent auction theory and experimental results document strategic demand reduction by bidders in uniform-price auctions. The present article extends this area of research to consider the effects of varying the number of bidders. Our theoretical model predicts that demand reduction should decrease with an increase in the number of bidders. Considerable demand reduction remains even in the asymptotic limit, although truthful bidding yields profits very close to those of equilibrium play. We experimentally confirm several of our predictions by examining bidding behavior of subjects in an actual marketplace, auctioning dozens of sportscards using both uniform-price and Vickrey auction formats.

Suggested Citation

Engelbrecht-Wiggans, Richard and List, John A. and Reiley, David H., Demand Reduction in Multi-Unit Auctions with Varying Numbers of Bidders: Theory and Evidence from a Field Experiment. International Economic Review, Vol. 47, No. 1, pp. 203-231, February 2006, Available at SSRN: https://ssrn.com/abstract=877103 or http://dx.doi.org/10.1111/j.1468-2354.2006.00377.x

Richard Engelbrecht-Wiggans

University of Illinois at Urbana-Champaign - Department of Business Administration ( email )

1206 South Sixth Street
Champaign, IL 61820
United States
217-333-1028 (Phone)

John A. List (Contact Author)

University of Chicago - Department of Economics ( email )

1126 East 59th Street
Chicago, IL 60637
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

David H. Reiley

Pandora Media, Inc. ( email )

2101 WEBSTER ST 16TH FLOOR
Oakland, CA 94612
United States

UC Berkeley School of Information ( email )

102 South Hall
Berkeley, CA 94720-4600
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
25
Abstract Views
1,068
PlumX Metrics