IDEAS home Printed from https://ideas.repec.org/p/jrp/jrpwrp/2008-066.html
   My bibliography  Save this paper

Heterogeneous bids in auctions with rational and markdown bidders - Theory and Experiment

Author

Listed:
  • Oliver Kirchkamp

    (Universität Jena, School of Economics)

  • J. Philipp Reiß

    (Maastricht University, Economics Department)

Abstract

We present results from a series of experiments that allow us to measure overbidding and, in particular, underbidding in first-price auctions. We investigate how the amount of underbidding depends on seemingly innocent parameters of the experimental setup. To structure our data we present and test a theory of constant markdown bids. While a fraction of bidders can be well described by Bayesian Nash equilibrium bids, a larger fraction seems to either use constant markdown bids or seems to rationally optimise against a population where some members use markdown bids and some are rational.

Suggested Citation

  • Oliver Kirchkamp & J. Philipp Reiß, 2008. "Heterogeneous bids in auctions with rational and markdown bidders - Theory and Experiment," Jena Economics Research Papers 2008-066, Friedrich-Schiller-University Jena.
    • Handle: RePEc:jrp:jrpwrp:2008-066
    as

    Download full text from publisher

    File URL: https://oweb.b67.uni-jena.de/Papers/jerp2008/wp_2008_066.pdf
    Download Restriction: no
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Roberto Cervone & Stefano Galavotti & Marco LiCalzi, 2009. "Symmetric Equilibria in Double Auctions with Markdown Buyers and Markup Sellers," Lecture Notes in Economics and Mathematical Systems, in: Cesáreo Hernández & Marta Posada & Adolfo López-Paredes (ed.), Artificial Economics, chapter 0, pages 81-92, Springer.
    2. Oliver Kirchkamp & Wladislaw Mill, 2019. "Spite vs. risk: explaining overbidding," CESifo Working Paper Series 7631, CESifo.
    3. Jason Shachat & Lijia Wei, 2013. "Discrete Rule Learning and the Bidding of the Sexes," Working Papers 1302, Xiamen Unversity, The Wang Yanan Institute for Studies in Economics, Finance and Economics Experimental Laboratory, revised 02 Jul 2013.
    4. Kirchkamp, Oliver & Mill, Wladislaw, 2021. "Spite vs. risk: Explaining overbidding in the second-price all-pay auction," Games and Economic Behavior, Elsevier, vol. 130(C), pages 616-635.
    5. Jason Shachat & Lijia Wei, 2012. "Procuring Commodities: First-Price Sealed-Bid or English Auctions?," Marketing Science, INFORMS, vol. 31(2), pages 317-333, March.
    6. Lorentziadis, Panos L., 2016. "Optimal bidding in auctions from a game theory perspective," European Journal of Operational Research, Elsevier, vol. 248(2), pages 347-371.
    7. Philippe Gillen & Alexander Rasch & Achim Wambach & Peter Werner, 2016. "Bid pooling in reverse multi-unit Dutch auctions: an experimental investigation," Theory and Decision, Springer, vol. 81(4), pages 511-534, November.
    8. repec:wyi:journl:002158 is not listed on IDEAS
    9. Tobias Scheffel & Georg Ziegler & Martin Bichler, 2012. "On the impact of package selection in combinatorial auctions: an experimental study in the context of spectrum auction design," Experimental Economics, Springer;Economic Science Association, vol. 15(4), pages 667-692, December.

    More about this item

    Keywords

    Auction; Experiment; Overbidding; Underbidding; Risk-Aversion;
    All these keywords.

    JEL classification:

    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:jrp:jrpwrp:2008-066. 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: Markus Pasche (email available below). General contact details of provider: http://www.jenecon.de .

    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.