Premium
A Comparison of Multiple‐Unit All‐Pay and Winner‐Pay Auctions Under Incomplete Information*
Author(s) -
Barut Yasar,
Kovenock Dan,
Noussair Charles N.
Publication year - 2002
Publication title -
international economic review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 2.658
H-Index - 86
eISSN - 1468-2354
pISSN - 0020-6598
DOI - 10.1111/1468-2354.t01-1-00031
Subject(s) - common value auction , microeconomics , revenue equivalence , revenue , auction theory , bidding , vickrey auction , yield (engineering) , economics , english auction , pareto principle , set (abstract data type) , private information retrieval , value (mathematics) , computer science , finance , operations management , materials science , computer security , machine learning , programming language , metallurgy
This article examines the properties of independent‐private‐value all‐pay and winner‐pay auctions when there are multiple units sold. We study bidding behavior, efficiency, and revenue in a set of 23 experimental sessions. Our data show that the all‐pay auction and the winner‐pay auction are empirically revenue equivalent, though both yield higher revenue than the risk neutral Bayesian equilibrium. Our evidence also suggests that the winner‐pay auction is more likely to lead to a Pareto‐efficient allocation than the all‐pay auction.