This paper is an economist's guide to the recent phenomenon of auctions taking place on the Internet. I present a brief history of the development of Internet auctions as a type of electronic commerce, and give the results of an extensive survey of 142 different auction sites operating during autumn 1998. I estimate the size distribution of the sites, and find that revenues at the largest sites have been growing at more than 10% per month in 199899. Other issues addressed here include the business models the auction sites use, what goods they offer for sale, and what kinds of auction mechanisms they use. These new Internet auction institutions pose questions for economic theory, and give opportunities where auction theory might be used to improve Internet auctions in practice. I also present detailed data on the 1999 competition between the large incumbent eBay and the recent well-funded entrants Yahoo! and Amazon, and demonstrate that the different types of fees charged by auctioneers...

We design a field experiment to test two theories of fundraising for threshold public goods: Andreoni (1998) predicts that publicly announced "seed money" will increase charitable donations, while Bagnoli and Lipman (1989) predict a similar increase for a refund policy. Experimentally manipulating a solicitation of 3000 households for a university capital campaign produced data confirming both predictions. Increasing seed money from 10% to 67% of the campaign goal produced a nearly sixfold increase in contributions, with significant effects on both participation rates and average gift size. Imposing a refund increased contributions by a more modest 20%, with significant effects on average gift size.

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"Beauty-contest" is a game in which participants have to choose, typically, a number in [0,100], the winner being the person whose number is closest to a proportion of the average of all chosen numbers. We describe and analyze Beauty-contest experiments run in newspapers in UK, Spain, and Germany and find stable patterns of behavior across them, despite the uncontrollability of these experiments. These results are then compared with lab experiments involving undergraduates and game theorists as subjects, in what must be one of the largest empirical corroborations of interactive behavior ever tried. We claim that all observed behavior, across a wide variety of treatments and subject pools, can be interpreted as iterative reasoning. Level-1 reasoning, Level-2 reasoning and Level-3 reasoning are commonly observed in all the samples, while the equilibrium choice (Level-Maximum reasoning) is only prominently chosen by newspaper readers and theorists. The results show the empirical power of ...

conference and the Ohio State microeconomic’s seminar. We have received excellent research

An important question facing experimental economists is whether behavior inside the laboratory is a good indicator of behavior outside the laboratory. We begin with a model that assumes the choices that individuals make depend not just on financial implications, but also on the nature and extent of scrutiny by others, the particular context in which a decision is embedded, and the manner in which participants are selected. To the extent that lab and naturally-occurring environments systematically differ on any of these dimensions, the results obtained inside and outside the lab need not correspond. Based on theory and empirical evidence, we argue that lab experiments are a useful tool for generating qualitative insights, but are not well-suited for obtaining deep structural parameter estimates. We conclude that the sharp dichotomy sometimes drawn between lab experiments and data generated in natural settings is a false one. Each approach has strengths and weaknesses, and a combination of the two is likely to provide deeper insights than either in isolation.

FCC spectrum auctions sell licenses to provide mobile phone service in designated geographic territories. We empirically measure efficiency in the C block auction, where the continental US was split into 480 licenses, which differs from a common European system of awarding nationwide licenses. Spectrum auctions can be inefficient because of demand reduction and intimidatory collusion. Unfortunately, there is no one standard model of spectrum auctions. In the spirit of Haile and Tamer (2003), we structurally estimate bidder valuations using a necessary condition for equilibrium behavior known as pairwise stability. Pairwise stability holds across a set of spectrum auction models, including models with intimidatory collusion and demand reduction. Using our valuation estimates, we find that the allocation of licenses in the C block was inefficient compared to awarding four large regional licenses to the largest bidders.

We compare, experimentally, the Vickrey auction and an ascending-price auction recently introduced by Ausubel (1997). We evaluate the relative performance of both auctions in terms of efficiency and revenue in multi-unit environments where valuations either have a common-value component or are private information. We find that the Ausubel auction is less prone to overbidding and may yield higher revenue than the Vickrey auction. The gain in revenue seems to be coupled with a loss of efficiency.

Just as the Internet has changed the way many businesses conduct business, the Internet can also change the way academic researchers gather data. We describe revolutionary research strategies that employ six new data-collecting methodologies that can be employed using Internet technology. Data-collecting agents can gather very large amounts of data from the World Wide Web in a fraction of the time and the cost that it takes to gather data using traditional research methodologies. Online experiments, online judgment tasks, and online surveys expand the reach and reduce the cost when compared to traditional experiments, judgment tasks, and surveys. Because of the vast amounts of data available online, quasi-experiments can be conducted that allow the researcher to find subjects that meet some stimulus and some control without taking them out of their own environment. Finally, log files track a person’s movements and actions through a Web site. This article investigates the use of these relatively new tools from a philosophy of science perspective. We find that these new data collecting tools can enable research that is difficult or impossible when using traditional, non-online research methodologies. Using Runkel and McGrath’s (1972) “Three-Horned Dilemma ” model for traditional research methodologies as a base, we develop a framework

two anonymous reviewers and the Associate Editors for helpful comments on previous drafts of this paper. All remaining errors and omissions are solely our responsibility. This material is based on work supported by the National Science Foundation under Grant No. IIS-9733877. Costly Bidding In Online Markets For IT Services