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Learning to bid, but not to quit – Experience and Internet auctions

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Author Info
Bramsen, Jens-Martin

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Abstract

A 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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File URL: http://mpra.ub.uni-muenchen.de/14815/
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Publisher Info
Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 14815.

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Date of creation: Jun 2008
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Handle: RePEc:pra:mprapa:14815

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Related research
Keywords: Experience; Learning; Internet auctions; Reference-Dependent Preferences; Endowment Effect; Bidding behavior; eBay.;

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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

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Michael S. Haigh & John A. List, 2005. "Do Professional Traders Exhibit Myopic Loss Aversion? An Experimental Analysis," Journal of Finance, American Finance Association, vol. 60(1), pages 523-534, 02. [Downloadable!] (restricted)
    Other versions:
  2. Patrick Bajari & Ali Hortacsu, 2004. "Economic Insights from Internet Auctions," Journal of Economic Literature, American Economic Association, vol. 42(2), pages 457-486, June. [Downloadable!] (restricted)
  3. John A. List, 2004. "Neoclassical Theory Versus Prospect Theory: Evidence from the Marketplace," Framed Field Experiments 0047, The Field Experiments Website. [Downloadable!]
    Other versions:
  4. Rod Garratt & John Wooders, 2004. "Efficiency in Second-Price Auctions: A New Look at Old Data," University of California at Santa Barbara, Economics Working Paper Series 02-04, Department of Economics, UC Santa Barbara. [Downloadable!]
  5. John A. List, 2003. "Does Market Experience Eliminate Market Anomalies?," The Quarterly Journal of Economics, MIT Press, vol. 118(1), pages 41-71, February. [Downloadable!] (restricted)
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This page was last updated on 2009-11-25.

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