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Is the ‘Linkage Principle’ Valid? Evidence from the Field
Author(s) -
Cho SungJin,
Paarsch Harry J.,
Rust John
Publication year - 2014
Publication title -
the journal of industrial economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.93
H-Index - 77
eISSN - 1467-6451
pISSN - 0022-1821
DOI - 10.1111/joie.12048
Subject(s) - linkage (software) , field (mathematics) , revenue , common value auction , the internet , computer science , english auction , econometrics , microeconomics , business , economics , world wide web , mathematics , accounting , biochemistry , chemistry , pure mathematics , gene
We present field evidence concerning experienced bidders that supports the linkage principle—specifically, the prediction that in affiliated‐values auction environments the expected revenues generated at open‐outcry, ascending‐bid auctions are higher than those under auction formats that reveal less information to participants. Using field data from a large seller of automobiles who experimented with different selling formats, we have found that average revenues were significantly higher under an English auction than under a dynamic Internet auction format that revealed less information to bidders.