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The Bidder's Curse: Reply

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  • Ulrike Malmendier

Abstract

An important unresolved issue in the search literature is the question to what extent suboptimal search reflects "traditional search frictions," and to what extent it reflects behavioral biases. The distinction is important for assessing welfare, predicting firm behavior, and making policy choices. In order to make progress on this question, we need a precise theoretical distinction and micro data. I argue that Schneider's (2016) analysis and data confirm and complement the main findings in Malmendier and Lee (2011), but neither his nor our data permit us to quantitatively assess the relative importance of these determinants. I propose several feasible identification strategies. (JEL D12, D44)

Suggested Citation

  • Ulrike Malmendier, 2016. "The Bidder's Curse: Reply," American Economic Review, American Economic Association, vol. 106(4), pages 1195-1213, April.
    • Handle: RePEc:aea:aecrev:v:106:y:2016:i:4:p:1195-1213
    Note: DOI: 10.1257/aer.20151372
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    Cited by:

    1. Gesche, Tobias, 2018. "Reference Price Shifts and Customer Antagonism: Evidence from Reviews for Online Auctions," VfS Annual Conference 2018 (Freiburg, Breisgau): Digital Economy 181650, Verein für Socialpolitik / German Economic Association.
    2. Freeman, David J. & Kimbrough, Erik O. & Reiss, J. Philipp, 2020. "Opportunity cost, inattention and the bidder’s curse," European Economic Review, Elsevier, vol. 129(C).
    3. Florian Englmaier & Arno Schmöller & Till Stowasser, 2018. "Price Discontinuities in an Online Market for Used Cars," Management Science, INFORMS, vol. 64(6), pages 2754-2766, June.

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    More about this item

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions

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    1. The Bidder's Curse: Comment (AER 2016) in ReplicationWiki

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