Bidding Behavior and Decision Costs in Field Experiments
AbstractWhether rationality of economic behavior increases with expected payoffs and decreases with the cognitive cost it takes to formulate an optimal strategy remains an open question. We explore these issues with field data, using individual bids from sealed-bid auctions in which we sold nearly $10,000 worth of sportscards. Our results indicate that stakes do indeed matter, as high-priced ($70) cards produced more of the theoretically predicted strategic behavior than did lower-priced ($3) cards. We find additional evidence consistent with the importance of cognitive costs, as subjects more experienced with sportscard auctions exhibited a greater tendency to behave strategically than did less experienced bidders.
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Bibliographic InfoPaper provided by Vanderbilt University Department of Economics in its series Vanderbilt University Department of Economics Working Papers with number 0006.
Date of creation: Mar 2000
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Web page: http://www.vanderbilt.edu/econ/wparchive/index.html
Cognitive cost; field experiments; multi-unit auctions;
Other versions of this item:
- John A. List & David Lucking-Reiley, 2002. "Bidding Behavior and Decision Costs in Field Experiments," Economic Inquiry, Western Economic Association International, vol. 40(4), pages 611-619, October.
- John List & David Lucking-Reiley, 2002. "Bidding behavior and decision costs in field experiments," Framed Field Experiments 00181, The Field Experiments Website.
- D44 - Microeconomics - - Market Structure and Pricing - - - Auctions
- C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
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