Bidders' choice auctions: Raising revenues through the right to choose

Jacob K. Goeree, John Wooders, Charles R. Plott

Research output: Contribution to journalArticle

Abstract

Sales of multiple real-estate properties are often conducted via a sequence of ascending auctions, giving the winner at each stage the right to choose one of the available lots. We show that when bidders are risk averse, such bidders' choice auctions raise more revenues than standard simultaneous or sequential ascending auctions. We also report the results of laboratory experiments to investigate the effectiveness of bidders' choice auctions vis-a-vis the simultaneous ascending auction. The revenue-superiority of the bidders' choice auction is corroborated by the experimental data. Finally, we compare observed bidding behavior in the experiments with theoretically predicted bids to estimate a common risk aversion parameter from the data.

Original languageEnglish (US)
Pages (from-to)504-515
Number of pages12
JournalJournal of the European Economic Association
Volume2
Issue number2-3
DOIs
StatePublished - 2004

ASJC Scopus subject areas

  • Economics, Econometrics and Finance(all)

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