Learning to bid, but not to quit – Experience and Internet auctions
AbstractA classic argument in economics is that experience in the market place will eliminate mistakes and cognitive biases. Internet auctions are a popular market were some bidders gather extensive experience. In a unique data set from a Scandinavian auction site I question if and what bidders learn. At face value experienced bidders do adapt better bidding strategies. However, the so-called pseudo-endowment eﬀect does not disappear. Regardless of their experience, bidders will be inclined to increase their willingness to pay as a response to having had “ownership” (the leading bid) before being outbid. Thus, this data can conﬁrm that feedback, and especially negative feedback, seems to be a critical component in learning.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 14815.
Date of creation: Jun 2008
Date of revision:
Experience; Learning; Internet auctions; Reference-Dependent Preferences; Endowment Eﬀect; Bidding behavior; eBay.;
Find related papers by JEL classification:
- D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
- D44 - Microeconomics - - Market Structure and Pricing - - - Auctions
- D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search, Learning, and Information
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-05-02 (All new papers)
- NEP-EXP-2009-05-02 (Experimental Economics)
- NEP-NEU-2009-05-02 (Neuroeconomics)
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