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Buy or wait, that is the option: The buyer's option in sequential laboratory auctions

  • ENSAE
  • France and IZA

Research output: Contribution to journal › Article › peer-review

11 Citations (Scopus)

Abstract

We report results from an experiment on two-unit sequential auctions with and without a buyer's option (which allows the winner of the first auction to buy the second unit). The four main auction institutions are studied. Observed bidding behavior is close to Nash equilibrium bidding in the auctions for the second unit, but not in the auctions for the first unit. Despite these deviations, the buyer's option is correctly used in most cases. The revenue ranking of the four auctions is the same as in single-unit experiments. Successive prices are declining when the buyer's option is available.

Original languageEnglish
Pages (from-to)98-118
Number of pages21
JournalRAND Journal of Economics
Volume38
Issue number1
DOIs
Publication statusPublished - 1 Mar 2007
Externally publishedYes

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