In this paper, we examine the optimal mechanism design of selling an indivisible object to one regular buyer and one publicly known buyer, where inter-buyer resale cannot be prohibited. The resale market is modeled as a stochastic ultimatum bargaining game between the two buyers. We fully...

Anchoring is one of the most studied and robust behavioral biases, but there is little knowledge about its persistence in strategic settings. This article studies the role of anchoring bias in private-value auctions. We test experimentally two different anchor types. The announcement of a random...

The procurement of complex projects is often plagued by large cost overruns. One important reason for these additional costs are flaws in the initial design. If the project is procured with a price-only auction, sellers who spotted some of the flaws have no incentive to reveal them early. Each...

Winners in online auctions frequently fail to complete purchases. Major auction platforms therefore allow "second-chance" offers, where the runner-up bidder pays his own bid price, and they let sellers leave negative feedback on buyers who default. We show theoretically that (i) all else equal,...

I consider a seller selling a good to bidders with two-dimensional private information: their valuation for a good and their characteristic. While valuations are non-verifiable, characteristics are partially verifiable and convey information about the distribution of a bidder’s valuation. I...

Auctions are the allocation-mechanisms of choice whenever goods and information in markets are scarce. Therefore, understanding how information affects welfare and revenues in these markets is of fundamental interest. We introduce new statistical concepts, k- and k-m-dispersion, for...

In mechanism design, Myerson regularity is often too weak for a quantitative analysis of performance. For instance, ratios between revenue and welfare, or sales probabilities may vanish at the boundary of Myerson regularity. This paper therefore explores the quantitative version of Myerson...

We study the relative performance of the first-price sealed-bid auction, the second-price sealed-bid auction, and the all-pay sealed-bid auction in a laboratory experiment where bidders can signal information through their bidding behaviour to an outside observer. We consider two different...

We show that it is beneficial for a buyer to conduct a multi-stage mechanism if bidders are loss averse. In a first step, we derive a revenue equivalence principle. Fixing the multi-stage structure, the revenue is independent of the chosen payment rule. Secondly, we introduce a simple two-stage...

We study the role of commitment in a first-price auction environment. We devise a simple two-stage model in which bidders first submit an initial offer that the auctioneer can observe and then make a counteroffer. There is no commitment on the auctioneer's side to accept an offer as is or even...