Strategic Behavior and the Environment > Vol 5 > Issue 3–4

Bidder Behavior in a Common Value Simultaneous Ascending Auction

Robert Griffin, The Natural Capital Project, Woods Institute for the Environment, Stanford University, USA, rmgriff@stanford.edu Christopher Anderson, School of Aquatic and Fisheries Sciences, University of Washington, USA,
 
Suggested Citation
Robert Griffin and Christopher Anderson (2015), "Bidder Behavior in a Common Value Simultaneous Ascending Auction", Strategic Behavior and the Environment: Vol. 5: No. 3–4, pp 215-253. http://dx.doi.org/10.1561/102.00000061

Published: 22 Dec 2015
© 2015 R. Griffin and C. Anderson
 
Subjects
Uncertainty
 
Keywords
C11C38C91D44Q48
Simultaneous ascending auctionCommon valueExperimentEnergy
 

Article Help

Share

Download article
In this article:
1. Introduction
2. Theory and Methods
3. Results
4. Conclusion
Appendices
References

Abstract

We develop and experimentally test a model of bidder behavior in a simultaneous ascending auction for heterogeneous common value goods. The model follows the "straightforward" strategy developed by Milgrom (2000) while accounting for the adverse selection effect and the potential for the winner's curse. When this model is evaluated against laboratory results, we find that bidders deviate from the predicted price path as we observe extensive jump bidding and lower final prices than predicted. We observe that jump bidding generally increases prices and decreases earnings, suggesting that jump bids are based on bidder impatience rather than strategic motivations. Despite the failure of the model to predict bidder behavior, it does offer significant predictive power regarding the final allocation of goods and avoidance of the winner's curse.

DOI:10.1561/102.00000061