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Auctions in near-continuous time

Published online by Cambridge University Press:  14 March 2025

Cary Deck and
Bart J. Wilson
Cary Deck*
Affiliation:
University of Alabama, Tuscaloosa, AL, USAChapman University, Orange, CA, USA
Bart J. Wilson*
Affiliation:
Chapman University, Orange, CA, USA
*
cdeck@cba.ua.edu
bartwilson@gmail.com
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Abstract

The lack of a behavioral isomorphism between theoretically equivalent auction institutions is a robust finding in experimental economics. Using a near-continuous time environment and graphically adjustable bid functions, we are able to provide subjects with extensive feedback in multiple auction formats. We find that (1) First Price and Dutch Clock auctions are behaviorally isomorphic and (2) Second Price and English Clock auctions are behaviorally isomorphic. We further replicate the established result (1) that prices in Dutch Clock auctions exceed those of English Clock auctions and (2) that prices in First Price auctions exceed those of Second Price auctions. The latter pattern is often attributed to risk aversion which changes the equilibrium bidding strategy for First Price and Dutch Clock auctions. Because we observe each participant’s bid function directly, we find evidence suggesting a different explanation, namely that bidders are best responding to the distribution of observed prices.

Keywords

Auction institutionsLearningNear-continuous time experiments

JEL classification

D4: Market Structure, Pricing, and DesignD8: Information, Knowledge, and UncertaintyC9: Design of Experiments

Information

Type
Original Paper
Information
Experimental Economics , Volume 23 , Issue 1 , March 2020, pp. 110 - 126
Copyright
Copyright © 2019 Economic Science Association

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Footnotes

Electronic supplementary material The online version of this article (https://doi.org/10.1007/s10683-019-09603-4) contains supplementary material, which is available to authorized users.

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