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Kirchkamp, Oliver
Poen, Eva
Reiss, J. Philipp
Year of Publication: 
Series/Report no.: 
Jena Economic Research Papers 2008,022
In this paper we study equilibrium- and experimental bidding behaviour in first-price and second price auctions with outside options. We find that bidders do respond to outside options and to variations of common knowledge about competitors’ outside options. However, overbidding in first-price auctions is significantly higher with outside options than without. First-price auctions yield more revenue than second-price auctions. This revenue-premium is significantly higher with outside options. In second-price auctions the introduction of outside options has only a small effect.
Document Type: 
Working Paper

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