Time is money: The effect of clock speed on seller's revenue in Dutch auctions

Elena Katok, Anthony M. Kwasnica

Research output: Contribution to journalArticle

38 Scopus citations

Abstract

We study the role of timing in auctions under the premise that time is a valuable resource. When one object is for sale, Dutch and first-price sealed bid auctions are strategically equivalent in standard models, and therefore, they should yield the same revenue for the auctioneer. We study Dutch and first-price sealed bid auctions in the laboratory, with a specific emphasis on the speed of the clock in the Dutch auction. At fast clock speeds, revenue in the Dutch auction is significantly lower than it is in the sealed bid auction. When the clock is sufficiently slow, however, revenue in the Dutch auction is higher than the revenue in the sealed bid auction. We develop and test a simple model of auctions with impatient bidders that is consistent with these laboratory findings.

Original languageEnglish (US)
Pages (from-to)344-357
Number of pages14
JournalExperimental Economics
Volume11
Issue number4
DOIs
StatePublished - Dec 1 2008

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All Science Journal Classification (ASJC) codes

  • Economics, Econometrics and Finance (miscellaneous)

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