IDEAS home Printed from https://ideas.repec.org/p/hhs/bergec/2008_009.html
   My bibliography  Save this paper

Cursed Equilibrium Revisited

Author

Listed:
  • Christensen, Eirik N.

    (University of Bergen, Department of Economics)

Abstract

Empirical as well as experimental evidence strongly suggests that bidders in common value auctions typically do not conform to the requirements of perfect rationality. Eyster and Rabin (2005) develop a theory and an equilibrium concept - x-cursed equilibrium - for bounded rational bidding in common value auctions (among other situations), and also present some experimental evidence supporting the theory. This paper comments on these findings of an experiment conducted at the University of Bergen. In the experiment, participants often demonstrate behaviour that is beyond the bounds set by the x-cursed equilibrium theory, and I present an alternative theory that better explains the experimental findings.

Suggested Citation

  • Christensen, Eirik N., 2008. "Cursed Equilibrium Revisited," Working Papers in Economics 09/08, University of Bergen, Department of Economics.
    • Handle: RePEc:hhs:bergec:2008_009
    as

    Download full text from publisher

    File URL: http://ekstern.filer.uib.no/svf/2008/wp09-08.pdf
    File Function: Full text
    Download Restriction: no
    ---><---

    More about this item

    Keywords

    common value auctions; winner's curse; bounded rationality; experiments.;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hhs:bergec:2008_009. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Kjell Erik Lommerud (email available below). General contact details of provider: https://edirc.repec.org/data/iouibno.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.