Sequential Auction Design And Participant Behavior
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| Author | : Kendra C. Taylor |
| Publisher | : |
| Total Pages | : |
| Release | : 2005 |
| Genre | : Auctions |
| ISBN | : |
This thesis studies the impact of sequential auction design on participant behavior from both a theoretical and an empirical viewpoint. In the first of the two analyses, three sequential auction designs are characterized and compared based on expected profitability to the participants. The optimal bid strategy is derived as well. One of the designs, the alternating design, is a new auction design and is a blend of the other two. It assumes that the ability to bid in or initiate an auction is given to each side of the market in an alternating fashion to simulate seasonal markets. The conditions for an equilibrium auction design are derived and characteristics of the equilibrium are outlined. The primary result is that the alternating auction is a viable compromise auction design when buyers and suppliers disagree on whether to hold a sequence of forward or reverse auctions. We also found the value of information on future private value for a strategic supplier in a two-period case of the alternating and reverse auction designs. The empirical work studies the cause of low aggregation of timber supply in reverse auctions of an online timber exchange. Unlike previous research results regarding timber auctions, which focus on offline public auctions held by the U.S. Forest Service, we study online private auctions between logging companies and mills. A limited survey of the online auction data revealed that the auctions were successful less than 50% of the time. Regression analysis is used to determine which internal and external factors to the auction affect the aggregation of timber in an effort to determine the reason that so few auctions succeeded. The analysis revealed that the number of bidders, the description of the good and the volume demanded had a significant influence on the amount of timber supplied through the online auction exchange. A plausible explanation for the low aggregation is that the exchange was better suited to check the availability for custom cuts of timber and to transact standard timber.
| Author | : Paulo Goes |
| Publisher | : |
| Total Pages | : 0 |
| Release | : 2021 |
| Genre | : |
| ISBN | : |
Retailers are increasingly exploiting sequential online auctions as an effective and low cost distribution channel for disposing large quantities of inventory. In such auction environments, bidders have the opportunity of participating in many auctions to learn and choose the bidding strategy that best fits their preferences. Previous studies have mostly focused on identifying bidding strategies in single, isolated online auctions. Using a large data set collected from sequential online auctions, we first characterize bidding strategies in this interesting online environment and then develop an empirical model to explain bidders' adoption of different strategies. We also examine how bidders change their strategies over time. Our findings challenge the general belief that bidders employ their strategies regardless of experience or their specific demand. We find that bidders' demand, participation experience, and auction design parameters affect their choice of bidding strategies. Bidders with unit demand are likely to choose early bidding strategies, while those with multiple unit demand adopt late bidding strategies. Auction design parameters that affect bidders' perception of demand and supply trends affect bidders' choice of bidding strategies. As bidders gain experience within a sequence of auctions, they start choosing late bidding strategies. Our findings help auctioneers to design auction sequences that maximize their objectives. Full paper available at https://doi.org/10.2307/41703496.
| Author | : Paulo Goes |
| Publisher | : |
| Total Pages | : 0 |
| Release | : 2021 |
| Genre | : |
| ISBN | : |
A growing number of vendors are using a sequence of online auctions to sell large inventories of identical items. Although bidding strategies and bidder behavior in single auctions have been extensively studied, limited research exists on bidding in sequential auctions. We seek to explain how bidders in such an environment learn from the information, and form and update their willingness to pay (WTP). Using a large data set from an online auction retailer, we analyze the evolution of the bidders' WTP as well as the effect of auction design on bidders' WTP in sequential auctions. We see our study in the context of a longitudinal field experiment, in which we were able to track actions of repeat bidders over an extended period of time. Our results show that bidders' WTP in sequential auctions can be explained from their demand characteristics, their participation experience in previous auctions, outcomes in previous auctions, and auction design parameters. We also observe, characterize, and measure what we call a modified demand reduction effect exhibited across different auctions, over time, by multiunit demand bidders. Our findings are important to enable better auction mechanism design, and more sophisticated bidding tools that explore the rich information environment of sequential auctions. Full paper available at https://doi.org/10.1287/isre.1080.0216.
| Author | : Sascha Michael Schweitzer |
| Publisher | : KIT Scientific Publishing |
| Total Pages | : 212 |
| Release | : 2014-10-16 |
| Genre | : Business & Economics |
| ISBN | : 3866449046 |
This book presents two experimental studies that deal with the comparison of multi-item auction designs for two specific applications: the sale of 2.6 GHz radio spectrum rights in Europe, and the sale of emissions permits in Australia. In order to tackle the complexity of these experiments, a cognitively based toolkit is proposed, including modularized video instructions, comprehension tests, a learning platform, a graphical one-screen user interface, and comprehension-based group matching.
| Author | : Paul Milgrom |
| Publisher | : Cambridge University Press |
| Total Pages | : 378 |
| Release | : 2004-01-12 |
| Genre | : Business & Economics |
| ISBN | : 1139449168 |
This book provides a comprehensive introduction to modern auction theory and its important new applications. It is written by a leading economic theorist whose suggestions guided the creation of the new spectrum auction designs. Aimed at graduate students and professionals in economics, the book gives the most up-to-date treatments of both traditional theories of 'optimal auctions' and newer theories of multi-unit auctions and package auctions, and shows by example how these theories are used. The analysis explores the limitations of prominent older designs, such as the Vickrey auction design, and evaluates the practical responses to those limitations. It explores the tension between the traditional theory of auctions with a fixed set of bidders, in which the seller seeks to squeeze as much revenue as possible from the fixed set, and the theory of auctions with endogenous entry, in which bidder profits must be respected to encourage participation.
| Author | : David J. Salant |
| Publisher | : MIT Press |
| Total Pages | : 199 |
| Release | : 2014-12-26 |
| Genre | : Business & Economics |
| ISBN | : 0262321831 |
A guide to modeling and analyzing auctions, with the applications of game theory and auction theory to real-world auction decision making. Auctions are highly structured market transactions primarily used in thin markets (markets with few participants and infrequent transactions). In auctions, unlike most other markets, offers and counteroffers are typically made within a structure defined by a set of rigid and comprehensive rules. Because auctions are essentially complex negotiations that occur within a fully defined and rigid set of rules, they can be analyzed by game theoretic models more accurately and completely than can most other types of market transactions. This book offers a guide for modeling, analyzing, and predicting the outcomes of auctions, focusing on the application of game theory and auction theory to real-world auction design and decision making. After a brief introduction to fundamental concepts from game theory, the book explains some of the more significant results from the auction theory literature, including the revenue (or payoff) equivalence theorem, the winner's curse, and optimal auction design. Chapters on auction practice follow, addressing collusion, competition, information disclosure, and other basic principles of auction management, with some discussion of auction experiments and simulations. Finally, the book covers auction experience, with most of the discussion centered on energy and telecommunications auctions, which have become the proving ground for many new auction designs. A clear and concise introduction to auctions, auction design, and auction strategy, this Primer will be an essential resource for students, researchers, and practitioners.
| Author | : Flavio M. Menezes |
| Publisher | : |
| Total Pages | : 34 |
| Release | : 1994 |
| Genre | : Auctions |
| ISBN | : |
| Author | : Luca Corazzini |
| Publisher | : |
| Total Pages | : 46 |
| Release | : 2017 |
| Genre | : |
| ISBN | : |
We experimentally study bidding behavior in sequential first-price procurement auctions where bidders' capacity constraints are private information. Treatment differs in the ex-ante probability distribution of sellers' capacities and in the (exogenous) probability that the second auction is actually implemented. Our results show that: (i) bidding behavior in the second auction conforms with sequential rationality; (ii) while first auction's bids negatively depend on capacity, bidders seem unable to recognize this link when, at the end of the first auction, they state their beliefs on the opponent's capacity. To rationalize this inconsistency between bids and beliefs, we conjecture that bidding in the first auction is also affected by a hidden, behavioral type - related to the strategic sophistication of bidders - that obfuscates the link between capacity and bids. Building on this intuition, we show that a simple level-k model may help explain the inconsistency.
| Author | : Ji Yong Lee |
| Publisher | : |
| Total Pages | : |
| Release | : 2016 |
| Genre | : |
| ISBN | : |
The objective of this thesis is to investigate three design issues in experimental auctions: 1) the effects of allowing negative bids for a privately valued good, 2) the effects of introducing additional alternatives (substitutes) for the auctioned good in an endowment auction, and 3) respondent behavior in acquiring information. The thesis consists of three papers examining those issues. The first paper examines participants bidding behavior when negative bids are allowed for privately valued goods in an experimental auction. We focus on two questions: i) whether subjects with negative values tend to bid strategically - either overbidding or underbidding in an effort to enhancing earnings, and ii) the performance of random nth and 5th price auctions. We find that: a) WTP bids are demand revealing, b) subjects tend to underbid WTA values, c) controlling for risk attitude partially explains the bias in WTA bids, and d) negative values from random nth auctions tend to be below those from 5th price auctions. In the second paper we 1) investigate the effect of the availability of varying numbers of alternatives (substitutes) for a privately valued good on participants bidding behavior, and 2) identify whether the availability of additional alternatives: a) impacts the value of product information, and b) impacts the effect of new information on product valuations. We find that: a) allowing additional alternatives in a private value auction does not significantly decrease subjects bids, and b) the presence of additional alternatives in the auction decreases both the value and effect of product information. The third paper examines the effect of acquired information on auction participants bidding behavior. We focus on three questions: i) how subjects choose/value different types of information, ii) whether the value of acquired information about a product influences the subsequent valuation of the product itself, and iii) whether the effects of acquired information differ from those of exogenously provided information. We find that: a) subjects behaviors of acquiring different types of information about the product are influenced by their heterogeneous characteristics (i.e. prior beliefs, risk attitudes, prior knowledge, etc.), b) subjects place more weight on acquired information than on provided information in their decision-making process, and c) individual subjects have different values of information which caused different impacts on product valuation.
| Author | : Alex Arsenault Morin |
| Publisher | : |
| Total Pages | : 0 |
| Release | : 2022 |
| Genre | : |
| ISBN | : |
This paper empirically explores how varying the timing of a sequence of auctions affects both bidder behavior and the welfare of procurers and bidders. We develop a structural auction model with endogenous participation in which bidding may be either simultaneous or sequential, and bidders may perceive auctioned objects as either complements or substitutes. We then apply this model to data on auctions for roof-maintenance projects in Montreal. We show that complementarities can account for as high as 17% of the total size of a contract combination. Finally, we develop an algorithm to search a schedule of auctions and show that the total cost of projects can be reduced by more than 8%.
