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Experimental Auction Study
EXPERIMENTAL Sealed-Bid Auction
EX
AM
PLE
My Value
My Bid
HK$XXX
EXPERIMENTAL Sealed-Bid Auction
Questions?
Ready?
Go
Price Level = $ 0.00
Please raise your hand if you’re active
Japanese Auction
Price Level = $ 10.00
Please raise your hand if you’re active
Japanese Auction
Price Level = $ 20.00
Please raise your hand if you’re active
Japanese Auction
Price Level = $ 30.00
Please raise your hand if you’re active
Japanese Auction
Japanese Auction
• At every price level you can raise your hard to indicate that you are active. Otherwise, you abandon the possibility of purchasing the item
• Auction ends when there is one or no active bidders remaining– If one is left, item is sold at that price– If none is left, item is sold at the previous price to a
randomly selected active bidder at that price level
Questions?
Ready?
Go
Price Level = $ 0.00
Please raise your hand if you’re active
Japanese Auction
Price Level = $ 10.00
Please raise your hand if you’re active
Japanese Auction
Price Level = $ 20.00
Please raise your hand if you’re active
Japanese Auction
Price Level = $ 30.00
Please raise your hand if you’re active
Japanese Auction
Price Level = $ 40.00
Please raise your hand if you’re active
Japanese Auction
Price Level = $ 50.00
Please raise your hand if you’re active
Japanese Auction
Price Level = $ 60.00
Please raise your hand if you’re active
Japanese Auction
Price Level = $ 70.00
Please raise your hand if you’re active
Japanese Auction
Price Level = $ 80.00
Please raise your hand if you’re active
Japanese Auction
Price Level = $ 90.00
Please raise your hand if you’re active
Japanese Auction
A Little Theory• In the Japanese auction,
exiting when price level exceeds your value is the optimal strategy
• This auction is theoretically efficient– Item sold to the bidder who values it most– No gain from secondary trading
• In the sealed-bid auction, people generally shade, and the buyer may not value the item most.
Summary• Science comprises both a theoretical and an
experimental side• Best practice in engineering incorporates
wind-tunnel/test-bed – a natural role for laboratory experiments in business strategy and government policy.
• Smart market – which is smarter? Japanese or Sealed-bid?
• Pedagogical tool to complement existing approaches in the teaching of economics, business related disciplines, aid the social and behavioral sciences
