Individual Behaavior and Bidding Heterogeneity in Sealed Bid Auctions Where the Number of Bidders is Unknown
AbstractThis paper analyzes individual bidding data from a series of first price (FP) and second price (SP) sealed-bid auctions in which the number of bidders is unknown. In SP auctions we find a substantial amount of coincidence with theory. We observe systematic deviations from risk neutral bidding in FP auctions and show theoretically that these deviations are consistent with risk averse preferences. We find essentially no heterogeneity in bidding in SP auctions where risk preferences and the number of bidders do not affect the optimal bid, while in the FP auctions heterogeneity in bidding persists and increases with experience. We conclude that heterogeneity in bidding in FP auctions is consistent with heterogeneity in risk preferences, the attempt to count the number of bidders in the auction, and bidder specific noise. (JEL D44, C91)
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Bibliographic InfoPaper provided by Department of Economics, Florida State University in its series Working Papers with number wp2008_07_02.
Date of creation: Mar 2008
Date of revision:
Other versions of this item:
- Mark Isaac & Svetlana Pevnitskaya & Kurt S. Schnier, 2012. "Individual Behavior And Bidding Heterogeneity In Sealed Bid Auctions Where The Number Of Bidders Is Unknown," Economic Inquiry, Western Economic Association International, vol. 50(2), pages 516-533, 04.
- D44 - Microeconomics - - Market Structure and Pricing - - - Auctions
- C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-07-20 (All new papers)
- NEP-EXP-2008-07-20 (Experimental Economics)
- NEP-GTH-2008-07-20 (Game Theory)
- NEP-UPT-2008-07-20 (Utility Models & Prospect Theory)
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