Experiments permit rigorous investigations of auction theory generating a dialogue with theorists and policymakers. In single-unit private value auctions the revenue equivalence theorem fails, but the comparative static predictions of Nash bidding theory hold, indicating that bidders are responsive to the primary economic forces present in the theory. In single-unit common value auctions inexperienced bidders invariably suffer from a ‘winner’s curse’, and the comparative static predictions of the theory fail, but more experienced bidders do substantially better. Recent research dealing with Internet auctions, mixed private and common value auctions and multiunit demand auctions are surveyed as well.
KeywordsAdverse selection Auctions Auctions (experiments) Becker–DeGroot–Marshak procedure Common value auctions Dutch auctions English auctions English clock auctions First-price auctions Independent private values model Internet auctions Learning direction theory Mechanism design Multi-unit demand auctions Revenue equivalence theorem Risk aversion Risk-neutral Nash equilibrium Second-price auctions Vickrey auction Winner’s curse
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