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Posted Prices and Bid Affiliation: Evidence from Experimental Auctions

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  • Jay R. Corrigan
  • Matthew C. Rousu

Abstract

In most experimental auctions, researchers ask participants to bid on the same item in multiple potentially binding rounds, posting the price submitted by the top bidder or bidders after each of those rounds. If bids submitted in later rounds are affiliated with posted prices from earlier rounds, this practice could result in biased value estimates. In this article, we discuss the results of an experiment designed explicitly to test whether posted prices affect bidding behavior. We find that for familiar items, high posted prices lead to increased bids in subsequent rounds. Our results have implications for researchers conducting experimental auctions. Copyright 2006, Oxford University Press.

Suggested Citation

  • Jay R. Corrigan & Matthew C. Rousu, 2006. "Posted Prices and Bid Affiliation: Evidence from Experimental Auctions," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 88(4), pages 1078-1090.
    • Handle: RePEc:oup:ajagec:v:88:y:2006:i:4:p:1078-1090
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    File URL: http://hdl.handle.net/10.1111/j.1467-8276.2006.00917.x
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    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions

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