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RFS Advance Access originally published online on October 28, 2005
Review of Financial Studies 2006 19(1):195-235; doi:10.1093/rfs/hhj005
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© The Author 2005. Published by Oxford University Press on behalf of The Society for Financial Studies. All rights reserved. For permissions, please email: journals.permissions@oxfordjournals.org.

Competition and Cooperation in Divisible Good Auctions: An Experimental Examination

Orly Sade
Jerusalem School of Business, Hebrew University of Jerusalem

Charles Schnitzlein
College of Business, University of Central Florida

Jaime F. Zender
Leeds School of Business, University of Colorado at Boulder

Address correspondence to Jaime Zender, 419 UCB, Boulder, CO 80309-0419, or e-mail: jaime.zender{at}colorado.edu.

An experimental approach is used to examine the performance of three different multiunit auction designs: discriminatory, uniform-price with fixed supply, and uniform-price with endogenous supply. We find the actual strategies to be inconsistent with theoretically identified equilibrium strategies. The discriminatory auction is found to be more susceptible to collusion than either uniform-price auction and so, contrary to theoretical predictions and previous experimental results, it generates the lowest average revenue. Consistent with theoretical predictions, the actual bid schedules are more elastic with reducible supply or discriminatory pricing than in the uniform-price auction with fixed supply.


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