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DEMAND REDUCTION IN MULTI‐UNIT AUCTIONS WITH VARYING NUMBERS OF BIDDERS: THEORY AND EVIDENCE FROM A FIELD EXPERIMENT*
Author(s) -
EngelbrechtWiggans Richard,
List John A.,
Reiley David H.
Publication year - 2006
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/j.1468-2354.2006.00377.x
Subject(s) - bidding , reduction (mathematics) , demand reduction , common value auction , economics , limit (mathematics) , microeconomics , auction theory , vickrey auction , mathematical economics , mathematics , medicine , mathematical analysis , geometry , pathology
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.