Demand Reduction and Bidder Collusion in Uniform- and Discriminatory-Price Auctions: An experimental study

This paper reports results of an experimental study of uniform and discriminatory auctions of multiple objects in an environment of publicly known common values. We find that the bidding behavior in the uniform case exhibits two clear regularities: agents consistently play weakly dominated strategies by overbidding on the first unit and have moderate diffyculty coordinating on high payoff (low auction revenue) equilibria. However, subjects with experience in the same environment are better at reducing demand to achieve higher payoff. Bidders in discriminatory auctions tend to submit bids close to value for all units and are not fully successful in attempts at collusion.