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Allotment in first-price auctions: an experimental investigation

Published online by Cambridge University Press:  14 March 2025

Luca Corazzini ,
Stefano Galavotti ,
Rupert Sausgruber  and
Paola Valbonesi
Luca Corazzini*
Affiliation:
Department of Economics, University of Messina, Piazza XX Settebre, 4, 98122 Messina, Italy ISLA, Bocconi University, via Röntgen, 1, 20136 Milan, Italy
Stefano Galavotti*
Affiliation:
Department of Economics and Management, University of Padova, Via del Santo 33, 35123 Padova, Italy Centro Studi di Economia e Tecnica dell’Energia “Giorgio Levi Cases”, University of Padova, Padova, Italy
Rupert Sausgruber*
Affiliation:
Department of Economics, Vienna University of Economics and Business, Welthandelsplatz 1, 1020 Vienna, Austria
Paola Valbonesi*
Affiliation:
Department of Economics and Management, University of Padova, Via del Santo 33, 35123 Padova, Italy National Research University Higher School of Economics, Russian Federation Moscow-Perm, Russia Centro Studi di Economia e Tecnica dell’Energia “Giorgio Levi Cases”, University of Padova, Padova, Italy
*
[email protected]
[email protected]
[email protected]
[email protected]
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Abstract

We experimentally study the effects of allotment—the division of an item into homogeneous units—in independent private value auctions. We compare a bundling first-price auction with two equivalent treatments where allotment is implemented: a two-unit discriminatory auction and two simultaneous single-unit first-price auctions. We find that allotment in the form of a discriminatory auction generates a loss of efficiency with respect to bundling. In the allotment treatments, we observe large and persistent bid spread, and the discriminatory auction is less efficient than simultaneous auctions. We provide a unified interpretation of our results that is based on both a non-equilibrium response to the coordination problem characterizing the simultaneous auction format and a general class of behavioral preferences that includes risk aversion, joy of winning and loser’s regret as specific cases.

Keywords

AllotmentMulti-unit auctionDiscriminatory auctionFirst-price auctionLaboratory experiment

JEL classification

D44: Auctions H57: Procurement
Type
Original Paper
Information
Experimental Economics , Volume 20 , Issue 1 , March 2017 , pp. 70 - 99
Copyright
Copyright © 2016 Economic Science Association

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Footnotes

Electronic supplementary material The online version of this article (doi:https://doi.org/10.1007/s10683-016-9476-1) contains supplementary material, which is available to authorized users.

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