SFB 303 Discussion Paper No. B - 357

Author: Harstad, Ronald M.
Title: Dominant Strategy Adoption, Efficiency, and Bidders' Experience with Pricing Rules
Abstract: Truthful revelation is a dominant strategy in both second-price and English (oral ascending bid) private-values auctions. Controlled observations of English auctions are largely consistent with the dominant strategy prediction, but laboratory second-price auctions exhibit substantial and persistent overbidding, even with prior experience. The experience of having bid in an English auction has a significant effect, moving second-price bidders toward the dominant strategy. Two treatments attempting to isolate facets of the lessons from English auction participation are explored.
Creation-Date: January 1996
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