Vickrey auction vs BDM: difference in bidding behaviour and the impact of other-regarding motives

  • Flynn N
  • Kah C
  • Kerschbamer R
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Abstract

In an experiment, we first elicit the distributional preferences of subjects and then let them bid for a lottery, either in a Becker–DeGroot–Marschak (BDM) mechanism or a Vickrey auction (VA). The standard theory predicts that altruistic subjects underbid in the VA—compared to the BDM—while spiteful subjects overbid in the VA. The data do not confirm those predictions. While we observe aggregate underbidding in the VA, the result is not driven by the choices of altruistic subjects.

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Flynn, N., Kah, C., & Kerschbamer, R. (2016). Vickrey auction vs BDM: difference in bidding behaviour and the impact of other-regarding motives. Journal of the Economic Science Association, 2(2), 101–108. https://doi.org/10.1007/s40881-016-0027-5

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