Pooling in Auctions with Resale: Evidence from the lab and field

Michael K. Price, Department of Economics, University of Tennessee; Robert Hammond, Department of Economics, North Carolina State University
Investigators use an auction structure, and vary parameters of the auction to investigate a question from the real world relating to issues in land auctions conducted by the Nevada Bureau of Land Management (BLM) that in some auctions a number of bidders “pool” at the reserve price. The design varies three independent variables, the key one being whether or not there is the possibility of exchanging the objects on which people bid in a second phase. The other two independent variables are parameters (the reserve price, range of bidders’ values). The proposed research will use the institutional details of BLM auctions to design a series of laboratory experiments aimed at isolating the effect of resale opportunities on pooling at the reserve price. The laboratory setting will allow researchers to control key parameters – i.e., the distribution of values and associated reserve prices – that should theoretically influence pooling at the reserve price.