Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/92577
Authors: 
Harstad, Ronald M.
Year of Publication: 
2011
Series/Report no.: 
ISER Discussion Paper, Institute of Social and Economic Research, Osaka University 819
Abstract: 
Laboratory experiments reporting on shortfalls from allocative efficiency of allocation mechanisms depend on the induced-values methodology, which cannot be extended to the field. Harstad [2011] proposes to observe efficiency of allocation mechanisms without knowing motivations via behavior in appropriately designed aftermarkets. This paper demonstrates the approach in a highly simplified economy: allocation of a single unit of an abstract commodity. In the context studied, second-price auctions are observed to yield significantly greater behavioral inefficiencies than first-price auctions, both in terms of frequency of behaviorally inefficient outcomes, and in terms of the expected size of gains from aftermarket trade missed by the auction itself. The design is shown to be field-ready.
Document Type: 
Working Paper

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