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

摘要

In a sealed bid second-price auction (or English auction) with independent private values, bidders with a single unit demand truthfully bid their value (stay in the auction until the price reaches their value and then drop out). The discovery that such bidding is a dominant strategy is a celebrated result due to William Vickrey (1961). Vickrey also determined the type of simultaneous bidding auction that is needed to induce truthful bidding as a dominant strategy when m (m ≥ 2) units are auctioned and bidders have multi-unit demand. This procedure is much more complicated than second-price (or English) auctions and, to our knowledge, has never been used except in experimental laboratories. Lawrence M. Ausubel (1997) introduced a dynamic implementation for Vickrey's multi-unit demand auction where sincere bidding is the unique equilibrium surviving iterated elimination of weakly dominated strategies. Though weaker than Vickrey's dominant strategy solution, Ausubel's procedure is simpler, more transparent, and thus more likely to induce behavior that is closer to the equilibrium predictions and efficient allocation. Experimental work by John Kagel et al. (2001) and Alejandro M. Manelli et al. (1999) confirms this hypothesis.