Template-Type: ReDIF-Paper 1.0 Series: Tinbergen Institute Discussion Papers Creation-Date: 2011-02-11 Number: 11-024/1 Author-Name: Sander Onderstal Author-Workplace-Name: University of Amsterdam Author-Name: Ailko van der Veen Author-Workplace-Name: University of Amsterdam Title: Keeping out Trojan Horses: Auctions and Bankruptcy in the Laboratory Abstract: If a government auctions the right to market a good, continuity is likely to be of significant importance. In a laboratory experiment, we compare the effects of bidders' limited liability in the first-price sealed-bid auction and the English auction in a common value setting. Our data strongly reject our theoretical prediction that the English auction leads to less aggressive bids and fewer bankruptcies than the first-price sealed-bid auction. X-cursedness gives a robust explanation of our experimental observations, in contrast to risk aversion and asymmetric equilibria. Classification-JEL: C91, D44, L41 Keywords: Auctions, Bankruptcy, Laboratory Experiment File-Url: https://papers.tinbergen.nl/11024.pdf File-Format: application/pdf File-Size: 241736 bytes Handle: RePEc:tin:wpaper:20110024