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Behavior in second-price auctions by highly experienced eBay buyers and sellers

  • Rodney Garratt

    ()

  • Mark Walker

    ()

  • John Wooders

    ()

When second-price auctions have been conducted in the laboratory, most of the observed bids have been “overbids†(bids that exceed the bidder’s value) and there are very few underbids. Few if any of the subjects in those experiments had any prior experience bidding in auctions. We report on sealed-bid second-price auctions that we conducted on the Internet using subjects with substantial prior experience: they were highly experienced participants in eBay auctions. Unlike the novice bidders in previous (laboratory) experiments, the experienced bidders exhibited no greater tendency to overbid than to underbid. However, even subjects with substantial prior experience tend not to bid their values, suggesting that the non-optimal bidding of novice subjects is robust to substantial experience in non-experimental auctions. A key determinant of bidding behavior was whether a subject had ever been a seller on eBay.

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File URL: http://hdl.handle.net/10.1007/s10683-011-9287-3
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Article provided by Springer in its journal Experimental Economics.

Volume (Year): 15 (2012)
Issue (Month): 1 (March)
Pages: 44-57

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Handle: RePEc:kap:expeco:v:15:y:2012:i:1:p:44-57
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  1. Ronald Harstad, 2000. "Dominant Strategy Adoption and Bidders' Experience with Pricing Rules," Experimental Economics, Springer, vol. 3(3), pages 261-280, December.
  2. David Lucking-Reiley & Charles H. Mullin, 2000. "Recombinant Estimation for Normal-Form Games, with Applications to Auctions and Bargaining," Vanderbilt University Department of Economics Working Papers 0014, Vanderbilt University Department of Economics.
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  9. Harstad, Ronald M., 1996. "Dominant Strategy Adoption, Efficiency, and Bidders' Experience with Pricing Rules," Discussion Paper Serie B 357, University of Bonn, Germany.
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  12. Kagel, John H & Levin, Dan, 1993. "Independent Private Value Auctions: Bidder Behaviour in First-, Second- and Third-Price Auctions with Varying Numbers of Bidders," Economic Journal, Royal Economic Society, vol. 103(419), pages 868-79, July.
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  14. Rodney Garratt & Mark Walker & John Wooders, 2012. "Behavior in second-price auctions by highly experienced eBay buyers and sellers," Experimental Economics, Springer, vol. 15(1), pages 44-57, March.
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