Investment Incentives in Auctions: An Experiment

Grimm, Veronika and Mengel, Friederike and Ponti, Giovanni and Viianto, Lari Arthur (2006) Investment Incentives in Auctions: An Experiment. [Working Paper]. p. 33. Working Paper Series in Economics (No. 26). (Submitted)

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Abstract/Index

We experimentally analyze first and second price auctions where one bidder can achieve a comparative advantage by investment prior to the auction. We find that, as predicted by theory, bidders invest more often prior to second price auctions than prior to first price auctions. In both auction formats bidding is more aggressive than the equilibrium prediction. However, bidding is closer to equilibrium than in control treatments where the comparative advantage is exogenous.

Item Type: Report / Paper (Working Paper)
Research documents and activity classification: Working Papers > Non-Refereed Working Papers / of national relevance only
Divisions: Department of Business and Management
Uncontrolled Keywords: Auctions; Investment Incentives; Asymmetric Auctions; Experimental Economics.
MIUR Scientific Area: Area 13 - Economics and Statistics > SECS-P/01 Political Economy
Deposited by: Maria Teresa Nistico
Date Deposited: 16 Dec 2010 11:46
Last Modified: 21 Apr 2015 23:13
URI: http://eprints.luiss.it/id/eprint/840

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