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Does Anticipated Regret Really Matter? Revisiting the Role of Feedback in Auction Bidding

Author

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  • Peter Katuscak
  • Fabio Michelucci
  • Miroslav Zajicek

Abstract

Does the type of post-auction feedback affect bidding behavior in first price auctions? Filiz- Ozbay and Ozbay (2007) find that such manipulation can increase bids in a one-shot auction. They explain this as an effect of anticipated regret combined with the assumption that feedback directly affects salience of regret relative to material payoff. We revisit this important market design issue using four different auction protocols and a large sample of subjects. We do not find any systematic effect of feedback on the average bid/value ratio. This evidence indicates either the lack of anticipated regret or its manipulability by feedback in one-shot auctions.

Suggested Citation

  • Peter Katuscak & Fabio Michelucci & Miroslav Zajicek, 2013. "Does Anticipated Regret Really Matter? Revisiting the Role of Feedback in Auction Bidding," CERGE-EI Working Papers wp487, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
  • Handle: RePEc:cer:papers:wp487
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    References listed on IDEAS

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    1. Chen, Yan & Katuščák, Peter & Ozdenoren, Emre, 2013. "Why canʼt a woman bid more like a man?," Games and Economic Behavior, Elsevier, vol. 77(1), pages 181-213.
    2. Mariana Blanco & Dirk Engelmann & Alexander Koch & Hans-Theo Normann, 2010. "Belief elicitation in experiments: is there a hedging problem?," Experimental Economics, Springer;Economic Science Association, vol. 13(4), pages 412-438, December.
    3. Isaac, R. Mark & Walker, James M., 1985. "Information and conspiracy in sealed bid auctions," Journal of Economic Behavior & Organization, Elsevier, vol. 6(2), pages 139-159, June.
    4. Theodore L. Turocy & Elizabeth Watson, 2012. "Reservation Values and Regret in Laboratory First-Price Auctions: Context and Bidding Behavior," Southern Economic Journal, Southern Economic Association, vol. 78(4), pages 1163-1180, April.
    5. Krishna, Vijay, 2009. "Auction Theory," Elsevier Monographs, Elsevier, edition 2, number 9780123745071, July.
    6. Zeelenberg, Marcel & Pieters, Rik, 2004. "Consequences of regret aversion in real life: The case of the Dutch postcode lottery," Organizational Behavior and Human Decision Processes, Elsevier, vol. 93(2), pages 155-168, March.
    7. Tibor Neugebauer & Javier Perote, 2008. "Bidding ‘as if’ risk neutral in experimental first price auctions without information feedback," Experimental Economics, Springer;Economic Science Association, vol. 11(2), pages 190-202, June.
    8. John A. List, 2003. "Does Market Experience Eliminate Market Anomalies?," The Quarterly Journal of Economics, Oxford University Press, vol. 118(1), pages 41-71.
    9. Roger B. Myerson, 1981. "Optimal Auction Design," Mathematics of Operations Research, INFORMS, vol. 6(1), pages 58-73, February.
    10. Emel Filiz-Ozbay & Erkut Y. Ozbay, 2007. "Auctions with Anticipated Regret: Theory and Experiment," American Economic Review, American Economic Association, vol. 97(4), pages 1407-1418, September.
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    Cited by:

    1. Katuščák, Peter & Michelucci, Fabio & Zajíček, Miroslav, 2015. "Does feedback really matter in one-shot first-price auctions?," Journal of Economic Behavior & Organization, Elsevier, vol. 119(C), pages 139-152.

    More about this item

    Keywords

    auctions; bidding; feedback; regret;

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions

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