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Asymmetric information about rivals' types in standard auctions: An experiment

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Author Info
James Andreoni () (University of Wisconsin - Madison)
Yeon-Koo Che () (Department of Economics, Columbia University)
Jinwoo Kim () (Yonsei University)

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Abstract

This paper studies experimentally how information about rivals' types affects bidding behavior in first- and second-price auctions. The comparative static hypotheses associated with information about rivals enables us to test the relevance of such information as well as the general predictions of the auction theory, by providing an effective means to control for risk aversion and other behavioral motives that were difficult to control for in previous experiments. Our experimental evidence provides strong support for the theory, and sheds light on the roles of risk aversion and the spite motive in first- and second-price auctions, respectively.

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File URL: http://www.econ.columbia.edu/RePEc/pdf/DP0506-27.pdf
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Publisher Info
Paper provided by Columbia University, Department of Economics in its series Discussion Papers with number 0506-27.

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Length: 34 pages
Date of creation: 2006
Date of revision:
Handle: RePEc:clu:wpaper:0506-27

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Palfrey, Thomas R. & Goeree, Jacob & Holt, Charles, 2000. "Quantal Response Equilibrium and Overbidding in Private-value Auctions," Working Papers 1073, California Institute of Technology, Division of the Humanities and Social Sciences. [Downloadable!]
    Other versions:
  2. David J. Cooper & Hanming Fang, 2006. "Understanding Overbidding in Second Price Auctions: An Experimental Study," Cowles Foundation Discussion Papers 1557, Cowles Foundation, Yale University. [Downloadable!]
  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. John Morgan & Ken Steiglitz & George Reis, 2003. "The Spite Motive and Equilibrium Behavior in Auctions," Contributions to Economic Analysis & Policy, Berkeley Electronic Press, vol. 2(1), pages 1102-1102. [Downloadable!] (restricted)
  5. Douglas Dyer & John H. Kagel & Dan Levin, 1989. "Resolving Uncertainty about the Number of Bidders in Independent Private-Value Auctions: An Experimental Analysis," RAND Journal of Economics, The RAND Corporation, vol. 20(2), pages 268-279, Summer. [Downloadable!] (restricted)
  6. Hanming Fang, 2004. "Multidimensional Private Value Auctions," Theory workshop papers 121473000000000021, UCLA Department of Economics. [Downloadable!]
    Other versions:
  7. Kim, Jinwoo & Che, Yeon-Koo, 2004. "Asymmetric information about rivals' types in standard auctions," Games and Economic Behavior, Elsevier, vol. 46(2), pages 383-397, February. [Downloadable!] (restricted)
  8. Bergemann, Dirk & Pesendorfer, Martin, 2001. "Information Structures in Optimal Auctions," CEPR Discussion Papers 2991, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  9. Kagel, J.H. & Levin, D., 1988. "Independent Private Value Auctions: Bidder Behavior In First, Second And Third-Price Auctions With Varying Numbers Of Bidders," Papers 13, Houston - Department of Economics.
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  10. Thomas Palfrey, 2002. "Quantal Response Equilibrium and Overbidding in Private Value Auctions," Theory workshop papers 357966000000000089, UCLA Department of Economics. [Downloadable!]
  11. Chen, Kay-Yut & Plott, Charles R., 1998. "Nonlinear Behavior in Sealed Bid First Price Auctions," Games and Economic Behavior, Elsevier, vol. 25(1), pages 34-78, October. [Downloadable!] (restricted)
  12. Blume, Andreas, 2003. "Bertrand without fudge," Economics Letters, Elsevier, vol. 78(2), pages 167-168, February. [Downloadable!] (restricted)
  13. Selten, Reinhard, Abdolkarim Sadrieh, and Klaus Abbink, 1995. "Money does Not Induce Risk Neutral Behavior, but Binary Lotteries Do even Worse," Discussion Paper Serie B 343, University of Bonn, Germany.
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(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. David J. Cooper & Hanming Fang, 2006. "Understanding Overbidding in Second Price Auctions: An Experimental Study," Cowles Foundation Discussion Papers 1557, Cowles Foundation, Yale University. [Downloadable!]
  2. A. Alexander Elbittar, 2005. "Impact of Valuation Ranking Information on Bidding in First-Price," Microeconomics 0508008, EconWPA. [Downloadable!]
  3. Roider, Andreas & Schmitz, Patrick W., 2007. "Auctions with Anticipated Emotions: Overbidding, Underbidding, and Optimal Reserve Prices," CEPR Discussion Papers 6476, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  4. Hanming Fang, 2004. "Multidimensional Private Value Auctions," Theory workshop papers 121473000000000021, UCLA Department of Economics. [Downloadable!]
    Other versions:
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