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Framing the first-price auction

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Author Info

  • Theodore Turocy

    ()

  • Elizabeth Watson
  • Raymond Battalio

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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Bibliographic 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

Related research

Keywords: Auctions; First-price; Isomorphism;

References

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  1. 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.
  2. Timothy N. Cason & Daniel Friedman, 1997. "Price Formation in Single Call Markets," Econometrica, Econometric Society, vol. 65(2), pages 311-346, March.
  3. 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.
  4. Elena Katok & Anthony Kwasnica, 2008. "Time is money: The effect of clock speed on seller’s revenue in Dutch auctions," Experimental Economics, Springer, vol. 11(4), pages 344-357, December.
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Cited by:
  1. Elizabeth Watson & Theodore L. Turocy, 2011. "Reservation values and regret in laboratory first price auctions: Context and bidding behavior," Working Paper series, University of East Anglia, Centre for Behavioural and Experimental Social Science (CBESS) 11-14, School of Economics, University of East Anglia, Norwich, UK..
  2. Kagel, John H. & Levin, Dan, 2009. "Implementing efficient multi-object auction institutions: An experimental study of the performance of boundedly rational agents," Games and Economic Behavior, Elsevier, vol. 66(1), pages 221-237, May.
  3. 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.
  4. Meroz, Yael & Morone, Andrea & Morone, Piergiuseppe, 2009. "Eliciting environmental preferences of Ghanaians in the laboratory: An incentive-compatible experiment," MPRA Paper 17107, University Library of Munich, Germany.
  5. Yusufcan Masatlioglu & Sarah Taylor & Neslihan Uler, 2012. "Behavioral mechanism design: evidence from the modified first-price auctions," Review of Economic Design, Springer, vol. 16(2), pages 159-173, September.

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