2ND-PRICE AUCTIONS WITH ASYMMETRIC PAYOFFS - AN EXPERIMENTAL INVESTIGATION

A series of two-player, second-price common-value auctions ave reporte d. In symmetric auctions, bidders suffer from a winner's curse. In asy mmetric auctions in which one bidder hits a private value advantage, t he effect on bids and prices is proportional rather than explosive (th e prediction of Nash equilibrium bidding theory). Although advantaged bidders are close to making best responses to disadvantaged bidders, t he latter bid much more aggressively than in equilibrium, thereby earn ing negative average profits. Experienced bidders consistently bid clo ser to the Nash equilibrium than inexperienced bidders, although these adjustments towards equilibrium are small and at times uneven.