Continuous ascending vs. pooled multiple unit auctions

We examine a seldom studied multiple unit auction format known as a pooled auction. We use both theory and economic experiments to compare the pooled auction to the continuous simultaneous ascending auction on the grounds of revenue and efficiency generation. The results show that due to very aggressive bidding in the pooled auction, it generates substantially more revenue than the ascending auction while achieving equivalent efficiency levels. We then attempt to explain the overbidding in the pooled auction and find that neither risk nor loss aversion can explain it. We present instead a model with an attentional bias that is related to models of probability underweighting and show that it can explain the data.