Second-Price Proxy Auctions in Bidder-Seller Networks

We analyze a model of Internet auctions. Sellers each offer one item of a heterogeneous good to bidders who have unit-demand preferences. Items are sold in second-price proxy auctions. We derive a perfect Bayesian (epsilon-) equilibrium. Our experimental findings support the theoretical results. An analysis of sellers\u27 revenues in the Vickrey-auction reveals that they are non-monotonic in bids for substitutes valuations. We combine these results to investigate incomplete bidder-seller networks

Auction Fever: Theory and Experimental Evidence

It is not a secret that certain auction formats yield on average higher prices than others. The phenomenon that dynamic auctions are more likely to elicit higher bids than static one-shot auctions is often associated with the term ''auction fever.'' On a psychological level, we consider the so-called pseudo-endowment effect as largely responsible for peoples’ tendency to submit higher bids, potentially amplified by the source-dependence effect. The phenomenon of auction fever is replicated in an experimental investigation of different auction formats within a private values framework where bidders have private but incomplete knowledge of their valuation for a hypothetical good. We suggest this assumption to be more realistic than definite private values, as assumed in the traditional IPV model. An additional experimental investigation within the traditional IPV framework does not either reveal any indication for the appearance of auction fever. On the basis of our experimental observations we present a model of reference-dependent utility theory that comprehends the phenomenon by assuming that bidders' reference points are shifted by the pseudo-endowment and the source-dependence effect.

Myopically Forward-Looking Agents in a Network Formation Game: Theory and Experimental Evidence

A population of players is considered in which each agent can select her neighbors in order to play a 2x2 Hawk-Dove game with each of them. We design our experiment in continuous time where participants may change their Hawk-Dove action and/or their neighborhood at any point in time. We are interested in the resulting formation of networks and the action distributions. Compared with static Nash equilibrium (e.g., Berninghaus and Vogt, 2004, 2006; Bramoulle, Lopez-Pintado, Goyal, and Vega-Redondo, 2004) and social optimum as theoretical benchmark solutions, subjects seem to employ a more complex, forward-looking thinking. We develop an other benchmark solution, called one-step-ahead stability, that combines forward-looking belief formation with rational response and that fits the data much better.

Auctions, information, and new technologies

Auctions have been developed for economic transactions with asymmetric information and they are the simplest means of price determination for multilateral trading without "market makers." During the last years, new technologies gave a boost to the development and usage of innovative auction formats in several fields. We explore some of the new possibilities of applications and explain the differences to traditional auction formats. Furthermore, we demonstrate the potentialities of auctions concerning information gaining for the auctioneer as well as for the participating bidders

Auctions, information, and new technologies

Auctions have been developed for economic transactions with asymmetric information and they are the simplest means of price determination for multilateral trading without "market makers." During the last years, new technologies gave a boost to the development and usage of innovative auction formats in several fields. We explore some of the new possibilities of applications and explain the differences to traditional auction formats. Furthermore, we demonstrate the potentialities of auctions concerning information gaining for the auctioneer as well as for the participating bidders

How the auction design influences procurement prices: an experiment

The targeted design of auctions has to take behavioral regularities into account. This paper explores whether procurement auction formats can take advantage of bidders' willingness-to-pay-willingness-to-accept disparity. In a laboratory experiment, we compare four different second-price auction formats for procuring a good. The four formats are a sealed-bid auction and three different descending-clock auctions. We assume that a bidder's willingness-to-accept exceeds his willingness-to-pay and that, depending on the auction format, a bidder's reference-state shifts such that the bidder's perspective moves from a willingness-to-accept perspective towards a willingness-to-pay perspective, thus inducing aggressive bids. In line with the prediction, auction prices decline across the four formats. In particular, we observe the lowest prices in those two clock auction formats that, at every auction stage, select a bidder as the current leading bidder. We conclude that mechanisms influence the reference state and that auctions that foster reference-state shifts lead to lower payments for the buyer. These results support and generalize findings on sales auctions. However, not all of our findings on procurement auctions mirror findings on sales auctions. Bidders overbid in sealed-bid procurement auctions, which does not mirror the commonly observed overbidding in sealed-bid sales auctions

Restricting the benefit flow from neighbors : experiments on network formation

In an experimental framework on network formation inspired by the two-way information flow model of Bala and Goyal (2000), we observe that many groups participating in the experiment reach the strict Nash network resp. come very close to this network. Compared to the results of previous network experiments this is new. Among other things, the role of inequity aversion in explaining our experimental results is discussed

Myopically forward-looking agents in a network formation game : theory and experimental evidence

A population of players is considered in which each agent can select her neighbors in order to play a 2x2 Hawk-Dove game with each of them. We design our experiment in continuous time where participants may change their Hawk-Dove action and/or their neighborhood at any point in time. We are interested in the resulting formation of networks and the action distributions. Compared with static Nash equilibrium (e.g., Berninghaus and Vogt, 2004, 2006; Bramoulle, Lopez-Pintado, Goyal, and Vega-Redondo, 2004) and social optimum as theoretical benchmark solutions, subjects seem to employ a more complex, forward-looking thinking. We develop an other benchmark solution, called one-step-ahead stability, that combines forward-looking belief formation with rational response and that fits the data much better

Wichtiger Teilerfolg in der Gentherapie : Interview mit Dr. Marion Gabriele Ott und Dr. Manuel Grez

Die Septische Granulomatose (CGD) ist eine seltene Erkrankung, die auf einem genetischen Defekt bestimmter weißer Blutzellen beruht, die darauf spezialisiert sind, in den Körper eingedrungene Pilze und Bakterien aufzuspüren und zu vernichten. Frankfurter Ärzten und Wissenschaftlern um Prof. Dr. Dieter Hoelzer vom Klinikum der Johann Wolfgang Goethe-Universität und Dr. Manuel Grez vom Chemotherapeutischen Forschungsinstitut Georg-Speyer-Haus gelang es, eine intakte Kopie des defekten Gens in Blutstammzellen von zwei erwachsenen CGD-Patienten einzuschleusen und so die Funktion der Fresszellen teilweise wieder herzustellen. Eine vollständige Heilung gelang jedoch nicht – ein Patient verstarb zwei Jahre nach der zunächst erfolgreichen Behandlung an seiner Grunderkrankung. Im Gespräch mit Dr. Anne Hardy berichten Dr. Marion Gabriele Ott (Arbeitsgruppe Hoelzer) und Dr. Manuel Grez (Georg-Speyer-Haus) über die Höhen und Tiefen ihrer gentherapeutischen Forschung

Auction fever : theory and experimental evidence

It is not a secret that certain auction formats yield on average higher prices than others. The phenomenon that dynamic auctions are more likely to elicit higher bids than static one-shot auctions is often associated with the term ''auction fever.'' On a psychological level, we consider the so-called pseudo-endowment effect as largely responsible for peoples’ tendency to submit higher bids, potentially amplified by the source-dependence effect. The phenomenon of auction fever is replicated in an experimental investigation of different auction formats within a private values framework where bidders have private but incomplete knowledge of their valuation for a hypothetical good. We suggest this assumption to be more realistic than definite private values, as assumed in the traditional IPV model. An additional experimental investigation within the traditional IPV framework does not either reveal any indication for the appearance of auction fever. On the basis of our experimental observations we present a model of reference-dependent utility theory that comprehends the phenomenon by assuming that bidders' reference points are shifted by the pseudo-endowment and the source-dependence effect