Allotment in First Price Auctions: An Experimental Investigation

We experimentally investigate the effects of allotment - the division of one item into several and distinct units - on bidding behaviour and efficiency in fi…rst-price, independent private values auction formats. In particular, allotment is introduced by either implementing a single auction with two identical units (discriminatory auction) or by letting subjects to participate to two identical and simultaneous auctions, each involving a single unit. We fi…nd that allotment mitigates overbidding, with this effect being more pronunced in the discriminatory auction. Moreover, in the treatments with allotment, we observe a persistent and (relatively) large bid spread. Finally, because of bid spreading and the effects on overbidding, we observe a signi…cant loss of efficiency in the discriminatory auction relative to the other two treatments.