IDEAS home Printed from https://ideas.repec.org/a/oup/ecinqu/v31y1993i2p237-45.html
   My bibliography  Save this article

Rewards, Experience and Decision Costs in First Price Auctions

Author

Listed:
  • Smith, Vernon L
  • Walker, James M

Abstract

Consistent with a model of asymmetric risk aversion, subjects in first price auctions consistently bid above the risk neu tral Nash prediction. It has been argued that this is due to low opportun ity cost of deviating from the risk neutral bid. The authors increase opportunity cost (and payoff levels) by factors of 0, 1, 5, 10, and 20 from the normal levels generating payoffs up to $250 for risk neutra l subjects and observe an insignificant increase in the slope of individual bid functions. The RMSE of bids declines significantly. T his is consistent with a reward/decision cost model of bidding behavior. Copyright 1993 by Oxford University Press.

Suggested Citation

  • Smith, Vernon L & Walker, James M, 1993. "Rewards, Experience and Decision Costs in First Price Auctions," Economic Inquiry, Western Economic Association International, vol. 31(2), pages 237-245, April.
    • Handle: RePEc:oup:ecinqu:v:31:y:1993:i:2:p:237-45
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:oup:ecinqu:v:31:y:1993:i:2:p:237-45. See general information about how to correct material in RePEc.

    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.

    We have no bibliographic references for this item. You can help adding them by using 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Oxford University Press (email available below). General contact details of provider: https://edirc.repec.org/data/weaaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.