Bidding Behavior in Multi-Unit Auctions - An Experimental Investigation and some Theoretical Insights

Abstract

We present laboratory experiments of five different multi-unit auction mechanisms. Two units of a homogenous object were auctioned off among two bidders with flat demand for two units. We test whether expected demand reduction occurs in open and dealed-bid uniform price auctions. Revenue equivalence is tested for these auctions as well as for the Ausubel, the Vickrey and the discriminatory sealed-bid auction.Furthermore, we compare the five mechanisms with respect to the efficient allocation of the units. We also provide some theoretical insights concerning the equilibria of uniform-price auctions with incomplete information