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Posted Prices and Bid Affiliation: Evidence from Experimental Auctions

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  • Jay R. Corrigan
  • Matthew C. Rousu

Abstract

In most experimental auctions, researchers ask participants to bid on the same item in multiple potentially binding rounds, posting the price submitted by the top bidder or bidders after each of those rounds. If bids submitted in later rounds are affiliated with posted prices from earlier rounds, this practice could result in biased value estimates. In this article we discuss the results of an experiment designed explicitly to test whether posted prices affect bidding behavior. We find that for familiar items, high posted prices lead to increased bids in subsequent rounds. Our results have implications for researchers conducting experimental auctions.

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Bibliographic Info

Paper provided by Kenyon College, Department of Economics in its series Working Papers with number 0602.

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Date of creation: Nov 2006
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Handle: RePEc:ken:wpaper:0602

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Web page: http://economics.kenyon.edu/
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Keywords: Experimental Auctions; Posted Prices; Affiliation;

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References

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