Experimental analysis of uniform price and PAB auctions in electricity markets

The method of experimental economics is applied to research of Genco bidding strategy and market behavior of uniform price and pay-as-bid (PAB) auction mechanisms under different demand side response conditions with the multi-unit simultaneous auction model. The basic theories of experimental economics are introduced first. Then the experimental design is presented. Both qualitative analysis and quantitative analysis with strict statistic approaches are carried out on the experimental results. Several important conclusions are reached and can be used as reference to design of auction mechanisms in electricity markets. The research presented in this paper shows that experimental method has many advantages over traditional microeconomics and game theory in research of electricity markets and has many merits in modeling realistic electricity markets.