Demand Reduction in Multi-Unit Auctions: Evidence from a Sportscard Field Experiment: Reply

The authors' welcome Dan Levin's comment as a nice example of the manner in which they believe science should ideally proceed. But the authors' wish to raise three concerns with Levin's proposal. First, Levin fails to consider whether his Nash equilibrium holds in the multi-unit...

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Bibliographic Details
Published in:The American economic review 2005-03, Vol.95 (1), p.472-476
Main Authors: Engelbrecht-Wiggans, Richard, List, John A., Reiley, David H.
Format: Article
Language:English
Subjects:
Auctions
Bidding
Bids
Demand
Discourse
Dominant strategy
Earned surplus
Economic behaviour
Economic theory
Economic value
Efficiency
Empirical research
Equilibrium
Experiments
Field experiments
Game theory
Laboratories
Methodology
Microeconomics
Nash equilibrium
Prices
Shorter Papers
Total surplus
Zero
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Summary:The authors' welcome Dan Levin's comment as a nice example of the manner in which they believe science should ideally proceed. But the authors' wish to raise three concerns with Levin's proposal. First, Levin fails to consider whether his Nash equilibrium holds in the multi-unit Vickery auction as well as in the uniform-price auction. In order to explain the experimentally observed, his theory should predict differences in equilibrium bidding behavior across the two auction formats. To address this, the authors will evaluate the existence and other properties of his equilibrium in the Vickery's auction format. Second, they temper Levin's claims that his equilibrium generally provides higher efficiency and higher bidder's surplus than the EWK equilibrium does. Third, they show that given the empirical distribution of bids in the experiment, a bidder has a good reason not to follow Levin's prescription of bidding above value on the first unit.
ISSN:0002-8282
1944-7981
DOI:10.1257/0002828053828536