Theory and Misbehavior of First-Price Auctions
Recent experimental evidence appears to reject simple Nash equilibrium models of bidding behavior in first-price auctions. The author presents a methodological critique of this evidence. Existing tests have concentrated on deviations of subjects from predictions in the message space of the action: bid deviations. The author suggests that it is more natural to evaluate subject behavior in expected payoff space. He concludes that the evidence against the simple models is not significant enough to warrant their rejection. Copyright 1989 by American Economic Association.
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Volume (Year): 79 (1989)
Issue (Month): 4 (September)
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