An experimental examination of demand reduction in multi-unit versions of the Uniform-price, Vickrey, and English auctions

Demand reduction in Uniform-price and English auctions are strategic reactions by participants to reduce price and thus increase potential profits. Laboratory experiments similar to the field experiments performed by List and Reiley (Am. Econ. Rev. 2000; <B>9</B>(4): 961-972) in which two individuals with demands for two units vie for two units through a Uniform-price, English or Vickrey auction are conducted. We find strong support for demand reduction in both the English and Uniform-price auctions, with significantly more dramatic reductions in the English auction. However, there is significant overbidding in both the Vickrey and Uniform-price auction. This overbidding solves a puzzle found by List and Reiley in their field experiment data. Copyright © 2006 John Wiley & Sons, Ltd.