# 11-024/1 (2011-02-11)

Sander Onderstal, University of Amsterdam; Ailko van der Veen, University of Amsterdam
Auctions, Bankruptcy, Laboratory Experiment
JEL codes:
C91, D44, L41

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.