Fixed priced plus rationing: An experiment

Grimm, Veronika and Ponti, Giovanni and Kovarik, Jaromir (2006) Fixed priced plus rationing: An experiment. [Working Paper]. p. 23. Working Papers. Serie AD (No. 2006-26).

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Abstract/Index

This paper theoretically and experimentally explores a fixed price mechanism inwhich, if aggregate demand exceeds supply, bidders are proportionally rationed. Ifdemand is uncertain, in equilibrium bidders overstate their true demand in order toalleviate the effects of being rationed. This effect is the more intense the lower theprice, and bids reach their upper limit for sufficiently low prices. In the experiment weobserve a significant proportion of equilibrium play. However, subjects tend to overbidthe equilibrium strategy when prices are low and underbid when prices are high. Weexplain the experimental evidence by a simple model in which the probability of adeviation is decreasing in the expected loss associated with it.


Item Type:Report / Paper (Working Paper)
Research documents and activity classification:Working Papers > Refereed Working Papers / of international relevance
Divisions:Department of Business and Management
Additional Information:The definitive version of the paper has been published in "Experimental Economics", Vol. 11(4), Pages 402-422, December 2008.
Uncontrolled Keywords:Fixed Price Mechanism; Rationing; Experimental Economics.
MIUR Scientific Area:Area 13 - Economics and Statistics > SECS-P/01 Political Economy
Deposited By:Maria Teresa Nistico
Deposited On:15 Dec 2010 15:38
Last Modified:23 Apr 2013 14:48

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