2014 | 14 | 2 | 105-127
Article title

From English to First-Price Sealed Bid: An Empirical Assessment of the Change in Auction Type on Experienced Bidders

Title variants
Languages of publication
This paper estimate the differential impact of first-price sealed-bid (first-price) auctions relative to English auctions on auction revenue. While there is a theoretical literature on the potential outcomes of first-price relative to English auction, there is a paucity of articles that empirically estimate this relationship. The answer to this question is important not only to economists but also those designing auction for practical application. Using a unique dataset from tax lien auctions in Illinois, I empirically test the effect of a switch in auction type from English to first-price. I find auction revenue is greatly increased, by as much as 22 percent, under the first-price auction. The results are supported by a within county difference-in-difference model specification and are robust when restricting the sample across various specifications
Physical description
  • Housing Policy Economist, NAHB, Washington, DC 20005, 1-202-266-8398, Fax: 1-202-266-8575,
  • ALLEN, Marcus. T., Sheri FAIRCLOTH and Ali NEJADMALAYERI.S (2004). Factors Influencing Interest Rates on Delinquent Property Tax Certificates. Journal of Real Estate Finance and Economics 28:19-36.[Crossref]
  • ASHENFELTER, Orley. (1989). How Auctions Work for Wine and Art. Journal of Economic Perspectives 3:23-36.[Crossref]
  • ASHENFELTER, Orley. and David GENESOVE. (1992). Testing for Price Anomalies in Real-Estate Auction. American Economic Review 82:501-05.
  • CARLSON, T. L. (1951). The Illinois Military Tract: A Study of Land Occupation, Utilization and Tenure. Illinois Studies in the Social Sciences 32 (2), 1-218.
  • CONRAD, James and Larry DEBOER. (1990). The 1989 Property Tax Sale in Marion County: Results of a Survey of Investors. Unpublished Manuscript, Purdue University.
  • CONRAD, James, Larry DEBOER and Kevin T. MCNAMARA. (1992). Property Tax Auction Sales. Land Economics 68:72-82.
  • DEBOER, Larry. (1990). Property Tax Delinquency and Tax Sales: A Review of the Literature. Public Budgeting & Financial Management 2:311-49.
  • KAGEL, John H. (1995). Auctions: A Survey of Experimental Rsearch in J.H. Kagel and A.E. Roth, eds., The Handbook of Experimental Economics. Princeton University Press. 501-85.
  • HANSEN, R.G. (1985). Empirical Testing of Auction Theory. American Economic Review. 75:156-59.
  • HANSEN, R.G. (1986). Sealed-Bid versus Open Auctions: The Evidence. Economic Inquiry. 24:125-42.[Crossref]
  • KAGEL, John H. and Dan LEVIN. (2002). Common Value Auctions and the Winner’s Curse. Princeton University Press.
  • KAGEL, John H. and J.F. RICHARD. (2001). Super-Experienced Bidders in First-Price Common Value Auctions: Rules of Thumb, Nash Equilibrium Bidding and the Winner’s Curse. Review of Economics and Statistics.
  • KLEMPERER, Paul. (1999). Auction Theory: A Guide to the Literature. Journal of Economic Surveys 13:227-86.[Crossref]
  • KLEMPERER, Paul. (2002). What Really Matters in Auction Design. Journal of Economic Perspective. 16:169-89.
  • LIND, B. and C.R. PLOTT. (1991). The Winner’s Curse: Experiments with Buyers and with Sellers. American Economic Review 81:335-46.
  • MANNING, W. G. and J. MULLAHY. (2001). Estimating log models: to transform or not to transform. Journal of Health Economics 20:461-94.[Crossref][PubMed]
  • MCAFEE, R.P. and J. MCMILLAN. (1987). Auctions and Bidding. Journal of Economic Perspectives 25:699-738.
  • MCAFEE, R.P. and D. VINCENT. (1993). The Declining Price Anomaly. Journal of Economic Theory 60:191-212.[Crossref]
  • MEAD, W.J. (1967). Natural Resource Disposal Policy: Oral Auction versus Sealed Bid. Natural Resources Journal 7:195-224.
  • MENEZES, Flavio M. and Paulo Klinger MONTEIRO. (2005). An Introduction to Auction Theory. Oxford University Press.
  • MEZZITTI, Cluadio. (2011). Sequential Auctions with Informational Externalities and Aversion to Price Risk: Decreasing and Increasing Price Sequences. The Economic Journal 121:990-1016.[Crossref][WoS]
  • MILGROM, Paul R. and Robert J. WEBER. (1982). A Theory of Auctions and Competitive Bidding. Econometrica 50:1089-122.[Crossref]
  • MILGROM, Paul. (2004). Putting Auction Theory to Work. Cambridge University Press.
  • MILLER, Joshua J., and Silda NIKAJ. (2013). The Responsiveness of Tax Lien Investors in English Auctions to Matching Rules: Evidence from Illinois. Review of Regional Studies 43, no. 1.
  • SWIERENGA, R. P. (1974). Acres for Cents: Delinquent Tax Auctions in Frontier Iowa. Agricultural History 48 (2), 247-266. U.S. Department of Justice. (August 24, 2011). Three New Jersey Investors Plead Guilty to Bid Rigging at Municipal Tax Lien Auctions.
Document Type
Publication order reference
YADDA identifier
JavaScript is turned off in your web browser. Turn it on to take full advantage of this site, then refresh the page.