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Is the Experimental Auction a Dynamic Market?

  • Jay Corrigan

    ()

Experimental auctions are generally thought of as static markets. This paper presents the results of an experimental auction designed to test whether participants’ perceptions regarding the relative difficulty of delaying or reversing a transaction outside the experimental market systematically affect their willingness-to-pay bids. The results show that auction participants’ perceptions significantly impact their bids in a manner that is consistent with real option theory. These results suggest that economists must be careful to consider the existence of outside markets when designing experimental auctions. Copyright Springer 2005

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File URL: http://hdl.handle.net/10.1007/s10640-004-6981-z
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Article provided by European Association of Environmental and Resource Economists in its journal Environmental & Resource Economics.

Volume (Year): 31 (2005)
Issue (Month): 1 (05)
Pages: 35-45

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Handle: RePEc:kap:enreec:v:31:y:2005:i:1:p:35-45
Contact details of provider: Web page: http://www.springerlink.com/link.asp?id=100263

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  18. Jay R. Corrigan & Matthew C. Rousu, 2006. "The Effect of Initial Endowments in Experimental Auctions," Working Papers 0601, Kenyon College, Department of Economics.
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  20. Davis, Douglas D & Williams, Arlington W, 1991. "The Hayek Hypothesis in Experimental Auctions: Institutional Effects and Market Power," Economic Inquiry, Western Economic Association International, vol. 29(2), pages 261-74, April.
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