Universität zu Köln

Essays on Bidding Behavior in Auctions

Ilieva, Lyuba (2012) Essays on Bidding Behavior in Auctions. PhD thesis, Universität zu Köln.

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    Abstract

    The following thesis presents the results of three experimental studies that investigate how changes in the auction environment or auction rules affect bidding behavior and the auction outcome in a variety of auctions. The first study is concerned with the impact of ambiguity about one’s competitiveness. In particular, bidders are either informed or not informed about the upper limit of the support of a uniform distribution from which their competitors’ bids are drawn. Their relative bid is found to decrease under ambiguity – an effect, which is not predicted by standard ambiguity theories alone. A combination of smooth ambiguity and nonlinear probability weighting is shown to organize the experimental results. The second study investigates how two forms of favoritism affect the auction outcome. In one of the treatments, an ex ante preferred bidder is given the right of first refusal. In the other treatment, the seller elicits the preferred bidder’s valuation with an incentive compatible transfer. The good is then sold to the non-preferred bidder(s) via an auction with a reserve price that optimizes the expected joint payoff of the seller and the preferred bidder. The formal analysis for risk-neutral bidders is based to a great extend on Burguet and Perry (2009). Observed behavior partly deviates from the theoretical predictions. In particular, the auction with an optimal reserve price does not maximize the joint payoff of the seller and the preferred bidder. Most of the deviations can be explained by accounting for risk aversion. The third study is concerned with multi-unit uniform-price auctions in the context of emission trading. It investigates the impact of auction frequency on the ability of the secondary market to achieve cost-efficient emission reduction. In the experiment, frequent auctioning does not increase the allocative efficiency (due to better information in later trading periods) but leads to higher price variability and thus higher total abatement costs.

    Item Type: Thesis (PhD thesis)
    Creators:
    CreatorsEmail
    Ilieva, Lyuba
    Corporate Creators: Universität zu Köln
    URN: urn:nbn:de:hbz:38-50263
    Subjects: Management and auxiliary services
    Uncontrolled Keywords:
    KeywordsLanguage
    auctions, experiments, emission trading, ambiguity, right of first refusalUNSPECIFIED
    Faculty: Wirtschafts- u. Sozialwissenschaftliche Fakultät
    Divisions: Wirtschafts- u. Sozialwissenschaftliche Fakultät > Staatswissenschaftliches (Volkswirtschaftliches) Seminar
    Language: English
    Date: 12 November 2012
    Date Type: Publication
    Date of oral exam: 14 January 2013
    Full Text Status: Public
    Date Deposited: 13 Feb 2013 14:38:28
    Referee
    NameAcademic Title
    Ockenfels, AxelProf. Dr.
    URI: http://kups.ub.uni-koeln.de/id/eprint/5026

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