Information disclosure in auctions: An experiment

Martin Dufwenberg; Uri Gneezy

doi:10.1016/S0167-2681(01)00235-9

Information disclosure in auctions: An experiment

Martin Dufwenberg, Uri Gneezy

Economics

Research output: Contribution to journal › Article › peer-review

59 Scopus citations

Abstract

We report experimental results on the importance of information disclosure policy in first-price sealed-bid auctions. Interaction takes place in 10 periods according to a random-matching protocol, and we control the level of information feedback bidders receive after each period. When bidders are informed about the losing bids in previous periods, prices are higher than the theoretical prediction. However, when this information is not revealed the bidding becomes more competitive, and the bids come close to the theoretical prediction. We suggest that a signaling phenomenon may be important for explaining these results.

Original language	English (US)
Pages (from-to)	431-444
Number of pages	14
Journal	Journal of Economic Behavior and Organization
Volume	48
Issue number	4
DOIs	https://doi.org/10.1016/S0167-2681(01)00235-9
State	Published - 2002

Keywords

Experiment
First-price auctions
Information disclosure
Signaling

ASJC Scopus subject areas

Economics and Econometrics
Organizational Behavior and Human Resource Management

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10.1016/S0167-2681(01)00235-9

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title = "Information disclosure in auctions: An experiment",

abstract = "We report experimental results on the importance of information disclosure policy in first-price sealed-bid auctions. Interaction takes place in 10 periods according to a random-matching protocol, and we control the level of information feedback bidders receive after each period. When bidders are informed about the losing bids in previous periods, prices are higher than the theoretical prediction. However, when this information is not revealed the bidding becomes more competitive, and the bids come close to the theoretical prediction. We suggest that a signaling phenomenon may be important for explaining these results.",

keywords = "Experiment, First-price auctions, Information disclosure, Signaling",

author = "Martin Dufwenberg and Uri Gneezy",

note = "Funding Information: We thank Gary Charness, Eric van Damme, David Grether, and Reinhard Selten for very helpful comments, and the Swedish Competition Authority for financial support. We started this research while we were both at the CentER for Economic Research at Tilburg University, and completed it during a visit of Uri Gneezy to Stockholm University. ",

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AU - Gneezy, Uri

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N2 - We report experimental results on the importance of information disclosure policy in first-price sealed-bid auctions. Interaction takes place in 10 periods according to a random-matching protocol, and we control the level of information feedback bidders receive after each period. When bidders are informed about the losing bids in previous periods, prices are higher than the theoretical prediction. However, when this information is not revealed the bidding becomes more competitive, and the bids come close to the theoretical prediction. We suggest that a signaling phenomenon may be important for explaining these results.

AB - We report experimental results on the importance of information disclosure policy in first-price sealed-bid auctions. Interaction takes place in 10 periods according to a random-matching protocol, and we control the level of information feedback bidders receive after each period. When bidders are informed about the losing bids in previous periods, prices are higher than the theoretical prediction. However, when this information is not revealed the bidding becomes more competitive, and the bids come close to the theoretical prediction. We suggest that a signaling phenomenon may be important for explaining these results.

KW - Experiment

KW - First-price auctions

KW - Information disclosure

KW - Signaling

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Information disclosure in auctions: An experiment

Abstract

Keywords

ASJC Scopus subject areas

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