Review of Industrial Organization

, Volume 37, Issue 1, pp 43–50 | Cite as

Efficiency in Second-Price Auctions: A New Look at Old Data

  • Rodney J. Garratt
  • John Wooders
Open Access


Experiments on second-price sealed-bid private value auctions have established that subjects typically bid more than their value, despite the fact that value bidding is a dominant strategy in such auctions. Moreover, the laboratory evidence shows that subjects do not learn to bid their values as they gain more experience. In the present paper, we re-examine the second-price auction data from Kagel and Levin’s (Econ J 103:868–879, 1993) classic paper. We find that auction efficiency increases over time, even though the frequency of overbidding is unchanged. We argue that the rise in efficiency is due to a decline in the variability of overbidding. This is consistent with subjects’ learning to bid more like each other.


Bidding Efficiency Second price auction 


Open Access

This article is distributed under the terms of the Creative Commons Attribution Noncommercial License which permits any noncommercial use, distribution, and reproduction in any medium, provided the original author(s) and source are credited.


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Copyright information

© The Author(s) 2010

Authors and Affiliations

  1. 1.Department of EconomicsUniversity of CaliforniaSanta BarbaraUSA
  2. 2.Department of EconomicsTucsonUSA

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