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Auctions with external incentives: Experimental evidence

Listed author(s):
  • Miguel A. Fonseca

    (Department of Economics, University of Exeter)

  • Francesco Giovannoni

    (Department of Economics, CSE and CMPO, University of Bristol)

  • Miltiadis Makris

    (Department of Economics, University of Southampton)

We consider auctions where bidders have external incentives and focus on the case where their valuations in the auction are positively correlated with their productivity which matters in a second stage job market. We study how this affects bidding behavior and wages in the job market and proceed to test the model’s implication in an experiment where treatments differ according to which bids are disclosed. Our results broadly confirm the theoretical prediction that bidders tend to overbid, and their bidding behavior and wages are influenced by the disclosure rule. The data also suggests that the dispersion in worker wages is affected by the disclosure rule, suggesting the importance of reputational bidding.

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File URL: http://people.exeter.ac.uk/cc371/RePEc/dpapers/DP1602.pdf
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Paper provided by Exeter University, Department of Economics in its series Discussion Papers with number 1602.

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Date of creation: 2016
Handle: RePEc:exe:wpaper:1602
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  1. Lange, Andreas & List, John A. & Price, Michael K., 2011. "Auctions with resale when private values are uncertain: Evidence from the lab and field," International Journal of Industrial Organization, Elsevier, vol. 29(1), pages 54-64, January.
  2. Timothy Salmon & Bart Wilson, 2008. "Second chance offers versus sequential auctions: theory and behavior," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 34(1), pages 47-67, January.
  3. Georganas, Sotiris & Kagel, John, 2011. "Asymmetric auctions with resale: An experimental study," Journal of Economic Theory, Elsevier, vol. 146(1), pages 359-371, January.
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