Document Type

Article

Publication Date

5-2-2016

Abstract

We design a multi-unit descending-price (Dutch) auction mechanism that has applications for resource allocation and pricing problems. We address specific auction design choices by theoretically and experimentally determining optimal information disclosure along two dimensions. Bidders are either informed of the number of bidders in the auction, or know that it is one of two possible sizes; they also either know the number of units remaining for sale or are unaware of how many units have been taken by other bidders. We find that revealing group size decreases bids, and therefore revenue, if units remaining are not shown. When group size is unknown the price also falls if the number of units remaining is revealed. The most efficient and largest revenue outcome occurs when bidders are not provided information on either group size or units remaining. These laboratory results conform to some directional predictions from our theory, although overbidding is common.

Comments

This is a pre-copy-editing, author-produced PDF of an article accepted for publication in Southern Economic Journal, volume 83, issue 1, in 2016 following peer review. The definitive publisher-authenticated version is available online at DOI: 10.1002/soej.12145.

Peer Reviewed

1

Copyright

Southern Economic Association

Available for download on Wednesday, May 02, 2018

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