Discrete Clock Auctions: An Experimental Study
Emel Filiz Ozbay, Peter Cramton, Erkut Y. Ozbay, and Pacharasut Sujarittanonta
,
2
(
15
)
Experimental Economics
309-322
June
2012
clock.pdf198.57 KB
Abstract
We analyze the implications of different pricing rules in discrete clock auctions. The two most common pricing rules are highest-rejected bid (HRB) and lowest-accepted bid (LAB). Under HRB, the winners pay the lowest price that clears the market; under LAB, the winners pay the highest price that clears the market. In theory, both the HRB and LAB auctions maximize revenues and are fully efficient in our setting. Our experimental results indicate that the LAB auction achieves higher revenues. This revenue result may explain the frequent use of LAB pricing.