Bidding in common value fair division games: The winner’scurse or even worse?

A unique indivisible commodity with an unknown common value is owned bygroup of individuals and should be allocated to one of them while compensating theothers monetarily. We study the so-called fair division game (Güth, Ivanova-Stenzel,Königstein, and Strobel (2002, 2005)) theoretically and experimentally for the commonvalue case and compare our results to the corresponding common value auction.Whereas symmetric risk neutral Nash equilibria are rather similar for both games,behavior differs strikingly. Implementing auctions and fair division games in the labin a repeated setting under first- and second-price rule, we find that overall behavior ismuch more dispersed for the fair division games than for the auctions.[...]