CeDEx workshop - Ailko van der Veen (University of Amsterdam)

Keeping Out Trojan Horses: Auctions and Bankruptcy in the Laboratory

If a government auctions the right to market a (public) good, continuity is likely to be of signifcant importance. In a laboratory experiment, we compare the effects of bidders limited liability in the first-price sealed-bid auction and the English auction in a common value setting. Our data strongly reject our theoretical prediction that the English auction leads to less aggressive bids and fewer bankruptcies than the first-price sealed-bid auction.