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The effects of induced mood on bidding in random nth-price auctions

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  • Capra, C. Monica
  • Lanier, Kelli F.
  • Meer, Shireen

Abstract

In this paper we study whether mood affects: 1) Willingness to pay (WTP); and 2) The effectiveness of the demand revealing mechanism. We study decisions using a random nth price auction with induced values and homegrown values. Our data show no clear support for negative mood effects on WTP and, under some conditions, they show weak support for positive mood effects on WTP. However, mood does affect the effectiveness of the value elicitation mechanism in revealing value. Under a good mood, subjects submit bids that are significantly higher than their induced values.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Economic Behavior & Organization.

Volume (Year): 75 (2010)
Issue (Month): 2 (August)
Pages: 223-234

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Handle: RePEc:eee:jeborg:v:75:y:2010:i:2:p:223-234

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Related research

Keywords: Auctions Demand revelation Willingness to pay Experiments Affect Mood;

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References

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  5. Harrison, Glen W. & Ronald M. Harstad & E. Elisabet Rutström, 1995. "Experimental Methods and Elicitation of Values," Discussion Paper Serie B 349, University of Bonn, Germany.
  6. Noussair, Charles & Robin, Stephane & Ruffieux, Bernard, 2004. "Revealing consumers' willingness-to-pay: A comparison of the BDM mechanism and the Vickrey auction," Journal of Economic Psychology, Elsevier, vol. 25(6), pages 725-741, December.
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  9. Hanemann, W Michael, 1991. "Willingness to Pay and Willingness to Accept: How Much Can They Differ?," American Economic Review, American Economic Association, vol. 81(3), pages 635-47, June.
  10. Matthew Rabin., 1992. "Incorporating Fairness into Game Theory and Economics," Economics Working Papers 92-199, University of California at Berkeley.
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  12. George Loewenstein, 2000. "Emotions in Economic Theory and Economic Behavior," American Economic Review, American Economic Association, vol. 90(2), pages 426-432, May.
  13. Shogren, Jason F. & Fox, John A. & Hayes, Dermot J. & Kliebenstein, James, 1994. "Bid Sensitivity in the Structure of the Vickrey Auction," Staff General Research Papers 10616, Iowa State University, Department of Economics.
  14. Bohm, Peter & Linden, Johan & Sonnegard, Joakim, 1997. "Eliciting Reservation Prices: Becker-DeGroot-Marschak Mechanisms vs. Markets," Economic Journal, Royal Economic Society, vol. 107(443), pages 1079-89, July.
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Citations

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Cited by:
  1. Drichoutis, Andreas & Nayga, Rodolfo, 2010. "Eliciting risk and time preferences under induced mood states," MPRA Paper 25731, University Library of Munich, Germany.
  2. Fehr-Duda, Helga & Epper, Thomas & Bruhin, Adrian & Schubert, Renate, 2011. "Risk and rationality: The effects of mood and decision rules on probability weighting," Journal of Economic Behavior & Organization, Elsevier, vol. 78(1), pages 14-24.
  3. Drichoutis, Andreas & Nayga, Rodolfo & Klonaris, Stathis, 2010. "The Effects of Induced Mood on Preference Reversals and Bidding Behavior in Experimental Auction Valuation," MPRA Paper 25597, University Library of Munich, Germany.
  4. Greiff, Matthias & Egbert, Henrik & Xhangolli, Kreshnik, 2013. "Pay What You Want – But Pay Enough! Information Asymmetries and PWYW Pricing," MPRA Paper 52766, University Library of Munich, Germany.
  5. De Silva, Dakshina G. & Pownall, Rachel A.J. & Wolk, Leonard, 2012. "Does the sun ‘shine’ on art prices?," Journal of Economic Behavior & Organization, Elsevier, vol. 82(1), pages 167-178.
  6. Maria De Paola & Francesca Gioia & Vincenzo Scoppa, 2013. "Overconfidence, Omens And Emotions: Results From A Field Experiment," Working Papers 201303, Università della Calabria, Dipartimento di Economia, Statistica e Finanza (Ex Dipartimento di Economia e Statistica).

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