It is not just escalation: The one dollar game revisited
This paper examines the one-dollar auction game ruling out escalation. The aim of the paper is to understand if players’ expectations about competitors’ moves are strong enough to induce at least one player to bid more than the auctioned euro. Any other bid represents an expected loss for the bidder, so he maximises his own payoff by choosing a bid, which produces a null expected payoff. The empirical results and the analysis based on them support theoretical findings. It is possible that the winner pays more than €1 to get €1 because of his expectations about competitors’ bids and because of his indifference over a certain interval. The results are symptoms of some risk aversion. In an English auction escalation leads to this result, but when escalation is ruled out, expectations and indifference of preferences can lead to the same result.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 41 (2012)
Issue (Month): 4 ()
|Contact details of provider:|| Web page: http://www.elsevier.com/locate/inca/620175|
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.:
- Maskin, Eric & Riley, John, 2003.
"Uniqueness of equilibrium in sealed high-bid auctions,"
Games and Economic Behavior,
Elsevier, vol. 45(2), pages 395-409, November.
- Eric Maskin & John Riley, 2003. "Uniqueness of Equilibrium in Sealed High-Bid Auctions," Economics Working Papers 0031, Institute for Advanced Study, School of Social Science.
- Barry O'neill, 1986. "International Escalation and the Dollar Auction," Journal of Conflict Resolution, Peace Science Society (International), vol. 30(1), pages 33-50, March.
- Martin Shubik, 1971. "The Dollar Auction game: a paradox in noncooperative behavior and escalation," Journal of Conflict Resolution, Peace Science Society (International), vol. 15(1), pages 109-111, March.
- Milgrom, Paul R & Weber, Robert J, 1982.
"A Theory of Auctions and Competitive Bidding,"
Econometric Society, vol. 50(5), pages 1089-1122, September.
- Wolfgang Leininger, 1989. "Escalation and Cooperation in Conflict Situations," Journal of Conflict Resolution, Peace Science Society (International), vol. 33(2), pages 231-254, June.
- Vijay Krishna & John Morgan, 1994.
"An Analysis of the War of Attrition and the All-Pay Auction,"
Game Theory and Information
- Krishna, Vijay & Morgan, John, 1997. "An Analysis of the War of Attrition and the All-Pay Auction," Journal of Economic Theory, Elsevier, vol. 72(2), pages 343-362, February.
- Ku, Gillian & Malhotra, Deepak & Murnighan, J. Keith, 2005. "Towards a competitive arousal model of decision-making: A study of auction fever in live and Internet auctions," Organizational Behavior and Human Decision Processes, Elsevier, vol. 96(2), pages 89-103, March.
When requesting a correction, please mention this item's handle: RePEc:eee:soceco:v:41:y:2012:i:4:p:434-438. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dana Niculescu)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.