Theory and Decision

, Volume 81, Issue 4, pp 511–534

Bid pooling in reverse multi-unit Dutch auctions: an experimental investigation

  • Philippe Gillen
  • Alexander Rasch
  • Achim Wambach
  • Peter Werner
Article

DOI: 10.1007/s11238-016-9546-z

Cite this article as:
Gillen, P., Rasch, A., Wambach, A. et al. Theory Decis (2016) 81: 511. doi:10.1007/s11238-016-9546-z
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Abstract

In this article we experimentally investigate reverse multi-unit Dutch auctions in which bidders compete to sell their single unit to a buyer who wants to purchase several objects. Our study yields three insights: (i) bids are substantially higher than Nash equilibrium bids predicted by standard economic theory; (ii) these higher-than-predicted prices gradually decline in later periods; and (iii) bid pooling (or simultaneous bidding) is frequently observed—the majority of bidders submit their bids immediately after the first bidder has sold his unit. A model that distinguishes between myopic and sophisticated bidding strategies helps to organize these patterns both on the aggregate and on the individual level.

Keywords

Bounded rationality Multi-unit auction Procurement Reverse Dutch auction 

JEL Classification

D44 D01 C91 

Funding information

Funder NameGrant NumberFunding Note
Deutsche Forschungsgemeinschaft

    Copyright information

    © Springer Science+Business Media New York 2016

    Authors and Affiliations

    • Philippe Gillen
      • 1
      • 2
    • Alexander Rasch
      • 3
    • Achim Wambach
      • 4
    • Peter Werner
      • 1
      • 2
    1. 1.Center for Social and Economic Behavior (C-SEB)University of CologneCologneGermany
    2. 2.Department of EconomicsUniversity of CologneCologneGermany
    3. 3.Düsseldorf Institute for Competition Economics (DICE)University of DüsseldorfDüsseldorfGermany
    4. 4.Centre for European Economic Research (ZEW)MannheimGermany

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