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Teaching Auction Strategy using Experiments Administered via the Internet.” Working paper

By John Asker, Brit Grosskopf, C. Nicholas Mckinney, Muriel Niederle, Alvin E. Roth and Georg Weizsäcker


This article presents an experimental design we use to teach concepts in the economics of auctions, and implications for e-Business procurement. The experiment is easily administered and can be adapted to many different treatments. The chief innovation from an implementation point of view is that it does not require the use of a lab or class time. Instead, the design is implementable on any of the many web-based auction sites (here we use Yahoo!). The design presented here has been used to demonstrate how information is transmitted by bids in an auction, and how this can make it difficult for well informed bidders to profit from their information, leading to disincentives for relatively informed bidders to enter an auction. Consequently an auction may sometimes be an ineffective mechanism for procurement, compared to other options. The broad pedagogical contribution of the auction experiment is to show how information can dramatically affect market outcomes and bidder incentives

Year: 2003
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