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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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Article provided by Springer & 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
DOI: 10.1007/s10640-004-6981-z
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