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Sealed bid auctions with ambiguity: Theory and experiments |
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| Authors: | Yan Chen,Peter Katu&scaron ?á k |
| Affiliation: | a School of Information, University of Michigan, 1075 Beal Avenue, Ann Arbor, MI 48109-2112, USA b CERGE-EI, P.O. Box 882, Politických vězň? 7, 111 21 Praha 1, Czech Republic c Department of Economics, University of Michigan, 611 Tappan Street, Ann Arbor, MI 48109-1220, USA |
| Abstract: | This study presents a laboratory experiment of the first and second price sealed bid auctions with independent private values, where the distribution of bidder valuations may be unknown. In our experimental setting, in first price auctions, bids are lower with the presence of ambiguity. This result is consistent with ambiguity loving in a model that allows for different ambiguity attitudes. We also find that the first price auction generates significantly higher revenue than the second price auction with and without ambiguity. |
| Keywords: | C91 D44 D83 |
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