Experimental Economics

, Volume 22, Issue 2, pp 477–505 | Cite as

Entry by successful speculators in auctions with resale

  • Marco Pagnozzi
  • Krista J. SaralEmail author
Original Paper


We experimentally analyze the role of speculators, who have no use value for the objects on sale, in auctions. The environment is a uniform-price sealed-bid auction for 2 identical objects, followed by a free-form bargaining resale market, with one positive-value bidder, and either one or two speculators who may choose simultaneously whether to enter the auction. We show that the bidder accommodates speculators by reducing demand in the auction and subsequently purchasing in the resale market, which encourages entry by speculators. The presence of multiple speculators induces each speculator to enter less often, but increases competition in the auction and the auction price. Speculators earn positive profits on average, except when multiple speculators enter the auction.


Speculators Entry Multi-object auctions Resale Economic experiments 

JEL Classification

D44 C90 



We would like to thank the editor and the referees for extremely helpful suggestions, as well as seminar participants at the 2014 ESA Ft. Lauderdale meeting, the LabSi Lab2 Workshop, the EARIE 2016 Conference, and the universities of Innsbruck and St. Gallen. We would also like to thank Philip Brookins for research assistance, members of the xs/fs group for use of the laboratory at Florida State University, and the International Foundation for Research in Experimental Economics (IFREE) for funding this Project.

Supplementary material

10683_2018_9564_MOESM1_ESM.pdf (63 kb)
Supplementary material 1 (pdf 62 KB)


  1. Ausubel, L., & Cramton, P. (1998). Demand reductions and inefficiency in multi-unit auctions. Mimeo: University of Maryland.Google Scholar
  2. Ausubel, L., Cramton, P., & Deneckere, R. (2002). Bargaining with incomplete information. In R. Aumann & S. Hart (Eds.), Handbook of game theory (Vol. 3). Amsterdam: Elsevier.Google Scholar
  3. Chintamani, J., & Kosmopoulou, G. (2015). Auctions with resale opportunities: An experimental study. Economic Inquiry, 53, 624–639.CrossRefGoogle Scholar
  4. Eckel, C., & Grossman, P. (2008). Forecasting risk attitudes: An experimental study using actual and forecast gamble choices. Journal of Economic Behavior and Organization, 68(1), 1–17.CrossRefGoogle Scholar
  5. Engelmann, D., & Grimm, V. (2009). Bidding behavior in multi-unit auctions—An experimental investigation. Economic Journal, 119, 855–882.CrossRefGoogle Scholar
  6. Filiz-Ozbay, E., Lopez-Vargas, K., & Ozbay, E. (2015). Multi-object auctions with resale: Theory and experiment. Games and Economic Behavior, 89, 1–16.CrossRefGoogle Scholar
  7. Fischbacher, U. (2007). Z-tree: Zurich toolbox for readymade economic experiments. Experimental Economics, 10(2), 171–178.CrossRefGoogle Scholar
  8. Garratt, R., & Georganas, S. (2017). Auctions with speculators: An experimental study. Mimeo: City University London.Google Scholar
  9. Garratt, R., & Tröger, T. (2006). Speculation in standard auctions with resale. Econometrica, 74(3), 753–769.CrossRefGoogle Scholar
  10. Georganas, S. (2011). English auctions with resale: An experimental study. Games and Economic Behavior, 73(1), 147–166.CrossRefGoogle Scholar
  11. Georganas, S., & Kagel, J. (2011). Asymmetric auctions with resale: An experimental study. Journal of Economic Theory, 146, 359–371.CrossRefGoogle Scholar
  12. Gode, Dhananjay K., & Sunder, Shyam. (1993). Allocative efficiency of markets with zero-intelligence traders: Market as a partial substitute for individual rationality. Journal of Political Economy, 101(1), 119–137.CrossRefGoogle Scholar
  13. Greiner, B. (2004) The online recruitment system ORSEE 2.0—A guide for the organization of experiments in economics. Working paper n. 10, University of Cologne.Google Scholar
  14. Kagel, J., & Levin, D. (2001). Behavior in multi-unit demand auctions: Experiments with uniform price and dynamic Vickrey auctions. Econometrica, 69, 413–454.CrossRefGoogle Scholar
  15. Kagel, J., & Levin, D. (2011). Auctions: A survey of experimental research. In A. Roth & J. Kagel (Eds.), The handbook of experimental economics (Vol. 2, pp. 1995–2010). Princeton: Princeton University Press.Google Scholar
  16. Lange, A., List, J., & Price, M. (2011). Auctions with resale when private values are uncertain: Theory and empirical evidence. International Journal of Industrial Organization, 29, 54–64.CrossRefGoogle Scholar
  17. Mougeot, M., Naegelen, F., Pelloux, B., & Rulliere, J. (2011). Breaking collusion in auctions through speculation: An experiment on CO2 emission permit markets. Journal of Public Economic Theory, 13(5), 829–856.CrossRefGoogle Scholar
  18. Murnighan, J., & Roth, A. (1977). The effects of communication and information availability in an experimental study of a three-person game. Management Science, 23(12), 1336–1348.CrossRefGoogle Scholar
  19. Pagnozzi, M. (2010). Are speculators unwelcome in multi-object auctions? American Economic Journal: Microeconomics, 2(2), 97–131.Google Scholar
  20. Pagnozzi, M., & Saral, K. J. (2016). Demand reduction in multi-object auctions with resale: An experimental analysis. Economic Journal, 127, 2702–2729.CrossRefGoogle Scholar
  21. Pagnozzi, M., & Saral, K. J. (2018). Efficiency in auctions with (failed) resale. Journal of Economic Behavior and Organization, forthcoming.Google Scholar
  22. Saral, K. J. (2012). Speculation and demand reduction in English clock auctions with resale. Journal of Economic Behavior and Organization, 84(1), 416–431.CrossRefGoogle Scholar
  23. Wilson, R. (1979). Auctions of shares. Quarterly Journal of Economics, 94, 675–689.CrossRefGoogle Scholar
  24. Xu, X., Levin, D., & Ye, L. (2013). Auctions with entry and resale. Games and Economic Behavior, 79, 92–105.CrossRefGoogle Scholar
  25. Zizzo, D. (2010). Experimenter demand effects in economic experiments. Experimental Economics, 13(1), 75–98.CrossRefGoogle Scholar

Copyright information

© Economic Science Association 2018

Authors and Affiliations

  1. 1.Department of Economics and CSEFUniversità di Napoli Federico IINaplesItaly
  2. 2.George Herbert Walker School of Business and TechnologyWebster University GenevaBellevueSwitzerland
  3. 3.GATE Lyon St EtienneÉcullyFrance

Personalised recommendations