Luca Corrazini (Padova University), Stefano Galavotti (Padova University), Rupert Sausgruber (University of Innsbruck), Paola Valbonesi (Padova University)
Abstract: We experimentally study the effects of allotment – the division of one item into several units – on bidding behaviour and efficiency in independent private value auctions. In particular, we compare results from a single-item, first-price auction with those observed in two equivalent treatments with allotment: a two-unit discriminatory auction and a setting in which subjects participate to two identical and simultaneous first-price auctions, each involving a single unit. We find that allotment mitigates overbidding, with this effect being more pronounced in the discriminatory auction. In the allotment treatments, most bidders submit different bids for identical units (bid spreading). Finally, across treatments, the discriminatory auction is the least efficient.