Efficiency in Auctions with Private and Common Values: An Experimental Study

摘要

Auctions are generally not efficient where the object's expected value depends on private an common value information. We report a series of first-price auction experiments to measure the degree of inefficiency that occurs with financially motivated bidders. While some subjects fall prey to the winner's curse, they weight their private and common value information in roughly the same manner as rational bidders, with observed efficiencies close to predicted levels. In- creased competition and reduced uncertainty about the common value positively affect revenues and efficiency. The public release of information about the common value also raises efficiency, although less than predicted.