Is the ’Linkage Principle’ Valid?: Evidence from the Field

Abstract

We present field evidence involving experienced bidders that supports the linkage principle-specifically, the prediction that in affiliated-values auction environments the expected revenues generated at open-outcry, ascending-bid (English) auctions are higher than those under other auction formats that reveal less information to participants.Using field data from a large seller of automobiles which experimented with different selling formats, we find that the seller's average revenues were significantly higher under an English auction than under a dynamic Internet auction that revealed far less information to bidders.