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TWO ESSAYS ON BIDDING IN MULTI-UNIT COMMON VALUE AUCTIONS
Title
TWO ESSAYS ON BIDDING IN MULTI-UNIT COMMON VALUE AUCTIONS.
Creator
Shao, Minjie, Schnitzlein, Charles, University of Central Florida
Abstract / Description
This dissertation consists of two essays on the topic of bidding in multi-unit common value auction. Essay one examines the role of capacity constraint on the auction results and bidding behavior. We consider a general case where bidders are unconstrained, and a second setting where bidders are capacity constrained. We document downward sloping demand curves for individual bidders. Bidders shade their bids by submitting quantity-price pairs and spreading their bids. The winner's curse is...
Show moreThis dissertation consists of two essays on the topic of bidding in multi-unit common value auction. Essay one examines the role of capacity constraint on the auction results and bidding behavior. We consider a general case where bidders are unconstrained, and a second setting where bidders are capacity constrained. We document downward sloping demand curves for individual bidders. Bidders shade their bids by submitting quantity-price pairs and spreading their bids. The winner's curse is strong in the unconstrained treatment, but we find no evidence of the winner's curse when bidding constraints are imposed. Unconstrained bidders shade bids significantly more and their quantity-weighted prices are much lower than those in the constrained treatment. Interacting with the information structure, the capacity constraint has a significant impact on the auction results including the market clearing price, market efficiency, and the degree of market concentration. We provide evidence that efficient price discovery in multi-unit auctions with diverse information is possible, but careful attention to auction design will make this outcome more likely. Essay two examines how the introduction of a noncompetitive bidding option affects outcomes in a multi-unit uniform-price auction. The experimental design incorporates many of the characteristics of the markets that pertain to the issuance of new equity securities. Important features of the bidding environment include endogenous bidder entry, costly information acquisition, bidders that differ by capacity constraint, and substantial uncertainty with respect to the intrinsic value. We use a standard uniform-price auction as our baseline setting where only competitive bids are accepted. Our results show that introducing the noncompetitive bidding option improves auction performance by increasing revenue and reducing price error. Underpricing is found in both treatments, but is less severe in the presence of the noncompetitive bidding option. The incorporation of this option significantly increases both the small bidder participation rate and allocation, and reduces the incentive for small bidders to free ride by submitting extremely high bids. Under both treatments, information acquisition increases large bidders' profits but proves unprofitable for small bidders, and pricing accuracy is increasing in the rate of information acquisition.
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Date Issued
2010
Identifier
CFE0003234, ucf:48526
Format
Document (PDF)
PURL
http://purl.flvc.org/ucf/fd/CFE0003234
A MEASURE OF ENTREPRENEURIAL RISK PREFERENCE AND OPTIMISM USING FIELD EXPERIMENTS
Title
A MEASURE OF ENTREPRENEURIAL RISK PREFERENCE AND OPTIMISM USING FIELD EXPERIMENTS.
Creator
Schneider, Mark, Elston, Julie, University of Central Florida
Abstract / Description
Previous studies have underscored the economic importance of the role of the entrepreneur, and empirical studies testing the nature of the entrepreneur are notably lacking. This study directly addresses this issue by examining newly gathered field data which captures the decision making and risk behaviors for a group of high-technology entrepreneurs. Two decision making tasks were used to elicit risk aversion measures and to test for any 'joy of winning' or judgmental errors, possibly in the...
Show morePrevious studies have underscored the economic importance of the role of the entrepreneur, and empirical studies testing the nature of the entrepreneur are notably lacking. This study directly addresses this issue by examining newly gathered field data which captures the decision making and risk behaviors for a group of high-technology entrepreneurs. Two decision making tasks were used to elicit risk aversion measures and to test for any 'joy of winning' or judgmental errors, possibly in the form of over optimistic behavior. These elicitations were made with the use of multiple price formats and winner's curse experiments. 62 responses were collected from subjects at the 2004 national Small Business Innovation Research (SBIR) conference in Atlanta, March 2004. From these 62 responses a subject pool of 33 entrepreneurs and 29 non-entrepreneurs were identified. Statistical methods were employed to assign risk aversion measures and identify any 'joy of winning' or judgmental errors for the entrepreneur (treatment) group compared with the non-entrepreneur (control) group. Findings show that entrepreneurs exhibit less risk aversion, but show no statistically meaningful difference in judgmental errors compared to their non-entrepreneur counterparts. However, there is evidence to support the claim that both entrepreneurs and non-entrepreneurs exhibit a 'joy of winning', and that the size of the effect is larger for entrepreneurs.
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Date Issued
2005
Identifier
CFE0000549, ucf:46426
Format
Document (PDF)
PURL
http://purl.flvc.org/ucf/fd/CFE0000549