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Experiments in Auction Theory

The experimental literature on auctions focuses on several questions. A lot of work has been done on testing the "revenue equivalence" or "strategic equivalence" between different types of auctions. Another strand of research focuses on looking at the prevalence of the "winner's curse" in certain auction formats.

  • Strategic Equivalence between the Dutch Auction and the First Price Sealed-Bid Auction - Some of the experimental results suggest that the prices in first-price sealed-bid auctions are higher than Dutch auction prices. A different kind of experiment suggests the opposite ordering of prices.

  • Strategic Equivalence between the English Auction and the Second Price Sealed-Bid Auction - Experimental results often fail to establish equivalence in these two types.

  • Bayesian Nash Equilibrium Bid Functions - Experimental results fail to support the risk neutral bid function but do provide support for more general models.

  • Experiments on the Winner's Curse - experiments suggest that this is a prevalent problem for inexperienced bidders.

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