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Framing the first-price auction

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Author Info
Theodore Turocy ()
Elizabeth Watson
Raymond Battalio

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Abstract

We revisit the result that, in laboratory independent private values auction, the first-price sealed bid and descending clock (or Dutch) implementations are not isomorphic. We investigate the hypothesis that this arises from framing and presentation effects. Our design focuses on a careful construction of subject interfaces that present the two environments as similarly as possible. Our sessions also consist of more auction periods to test whether any initial framing effects subsequently decrease over time. We find the difference between the implementations persists. To further investigate the difference, we report on an intermediate implementation which operates like the Dutch auction, but in which the clock continues to tick to the lowest price without informing bidders when others have bid on the object. Copyright Economic Science Association 2007

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File URL: http://hdl.handle.net/10.1007/s10683-006-9130-4
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Publisher Info
Article provided by Springer in its journal Experimental Economics.

Volume (Year): 10 (2007)
Issue (Month): 1 (March)
Pages: 37-51
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Handle: RePEc:kap:expeco:v:10:y:2007:i:1:p:37-51

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Web page: http://www.springerlink.com/link.asp?id=102888

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Related research
Keywords: Auctions First-price Isomorphism

References listed on IDEAS
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  1. Timothy N. Cason & Daniel Friedman, 1997. "Price Formation in Single Call Markets," Econometrica, Econometric Society, vol. 65(2), pages 311-346, March.
  2. Cox, James C & Smith, Vernon L & Walker, James M, 1988. " Theory and Individual Behavior of First-Price Auctions," Journal of Risk and Uncertainty, Springer, vol. 1(1), pages 61-99, March.
  3. Gode, D.K. & Sunder, S., 1991. "Allocative Efficiency of Markets with Zero Intelligence (Z1) Traders: Market as a Partial Substitute for Individual Rationality," GSIA Working Papers 1992-16, Carnegie Mellon University, Tepper School of Business.
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  1. Rapoport, Amnon & Otsubo, Hironori & Kim, Bora & Stein, William E., 2007. "Unique bid auctions: Equilibrium solutions and experimental evidence," MPRA Paper 4185, University Library of Munich, Germany, revised 17 Jul 2007. [Downloadable!]
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