Heterogeneous bids in auctions with rational and markdown bidders - Theory and Experiment
AbstractWe 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.
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Bibliographic InfoPaper provided by Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics in its series Jena Economic Research Papers with number 2008-066.
Date of creation: 01 Sep 2008
Date of revision:
Auction; Experiment; Overbidding; Underbidding; Risk-Aversion;
Find related papers by JEL classification:
- C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
- D44 - Microeconomics - - Market Structure and Pricing - - - Auctions
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-09-13 (All new papers)
- NEP-EXP-2008-09-13 (Experimental Economics)
- NEP-GTH-2008-09-13 (Game Theory)
- NEP-UPT-2008-09-13 (Utility Models & Prospect Theory)
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- Shachat, Jason & Wei, Lijia, 2013.
"Discrete Rule Learning and the Bidding of the Sexes,"
47953, University Library of Munich, Germany.
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- 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, vol. 15(4), pages 667-692, December.
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