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Earned Wealth, Engaged Bidders? Evidence from a second price auction

Author

Listed:
  • Nicolas Jacquemet

    () (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics)

  • Stephane Luchini

    () (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - ECM - Ecole Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique - AMU - Aix Marseille Université - EHESS - École des hautes études en sciences sociales)

  • Robert-Vincent Joule

    () (LPS - Laboratoire de Psychologie Sociale - AMU - Aix Marseille Université)

  • Jason Shogren

    () (Departement Economy and Finance, University of Wyoming - UW - University of Wyoming)

Abstract

Recent work in experimental economics has explored whether observed behavior depends on whether wealth was windfall or earned. This paper extends this work by considering whether earned wealth ffects bidding behavior in an induced-value second-price auction. We find people bid more sincerely in the auction with earned wealth given monetary incentives; earned wealth did not induce sincere bidding in hypothetical auctions.

Suggested Citation

  • Nicolas Jacquemet & Stephane Luchini & Robert-Vincent Joule & Jason Shogren, 2008. "Earned Wealth, Engaged Bidders? Evidence from a second price auction," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00277283, HAL.
    • Handle: RePEc:hal:cesptp:halshs-00277283
    Note: View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-00277283
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    References listed on IDEAS

    as
    1. Jacquemet, Nicolas & Joule, Robert-Vincent & Luchini, Stéphane & Shogren, Jason F., 2013. "Preference elicitation under oath," Journal of Environmental Economics and Management, Elsevier, vol. 65(1), pages 110-132.
    2. Todd L. Cherry & Peter Frykblom & Jason F. Shogren, 2002. "Hardnose the Dictator," American Economic Review, American Economic Association, vol. 92(4), pages 1218-1221, September.
    3. Cherry, Todd L. & Kroll, Stephan & Shogren, Jason F., 2005. "The impact of endowment heterogeneity and origin on public good contributions: evidence from the lab," Journal of Economic Behavior & Organization, Elsevier, vol. 57(3), pages 357-365, July.
    4. Jeremy Clark, 2002. "House Money Effects in Public Good Experiments," Experimental Economics, Springer;Economic Science Association, vol. 5(3), pages 223-231, December.
    5. Richard H. Thaler & Eric J. Johnson, 1990. "Gambling with the House Money and Trying to Break Even: The Effects of Prior Outcomes on Risky Choice," Management Science, INFORMS, vol. 36(6), pages 643-660, June.
    6. Rutstrom, E. Elisabet & Williams, Melonie B., 2000. "Entitlements and fairness:: an experimental study of distributive preferences," Journal of Economic Behavior & Organization, Elsevier, vol. 43(1), pages 75-89, September.
    7. Jeremy Clark, 1998. "Fairness in Public Good Provision: An Investigation of Preferences for Equality and Proportionality," Canadian Journal of Economics, Canadian Economics Association, vol. 31(3), pages 708-729, August.
    8. Glenn Harrison, 2007. "House money effects in public good experiments: Comment," Experimental Economics, Springer;Economic Science Association, vol. 10(4), pages 429-437, December.
    9. William Vickrey, 1961. "Counterspeculation, Auctions, And Competitive Sealed Tenders," Journal of Finance, American Finance Association, vol. 16(1), pages 8-37, March.
    10. Nicolas Jacquemet & Stephane Luchini & Robert-Vincent Joule & Jason Shogren, 2008. "Do French student really bid sincerely?," Working Papers halshs-00277282, HAL.
    11. Greiner, Ben, 2004. "An Online Recruitment System for Economic Experiments," MPRA Paper 13513, University Library of Munich, Germany.
    12. Nicolas Jacquemet & Stephane Luchini & Robert-Vincent Joule & Jason Shogren, 2008. "Do French student really bid sincerely?," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00277282, HAL.
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    Citations

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    Cited by:

    1. Nicolas Jacquemet & Alexander James & Stéphane Luchini & Jason Shogren, 2011. "Social Psychology and Environmental Economics: A New Look at ex ante Corrections of Biased Preference Evaluation," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 48(3), pages 413-433, March.
    2. Jacquemet, Nicolas & Joule, Robert-Vincent & Luchini, Stéphane & Shogren, Jason F., 2013. "Preference elicitation under oath," Journal of Environmental Economics and Management, Elsevier, vol. 65(1), pages 110-132.
    3. Samuel Ferey & Yannick Gabuthy & Nicolas Jacquemet, 2013. "L'apport de l'économie expérimentale dans l'élaboration des politiques publiques," Revue française d'économie, Presses de Sciences-Po, vol. 0(2), pages 155-194.
    4. Curtis R. Price & Roman M. Sheremeta, 2015. "Endowment Origin, Demographic Effects, and Individual Preferences in Contests," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 24(3), pages 597-619, September.
    5. Nicolas Jacquemet & Stéphane Luchini & Antoine Malézieux & Jason F. Shogren, 2017. "L’évasion fiscale est-elle un trait de personnalité ?. Une évaluation empirique des déterminants psychologiques de la « morale fiscale »," Revue économique, Presses de Sciences-Po, vol. 68(5), pages 809-828.
    6. Kechagia, Varvara & Drichoutis, Andreas C., 2016. "The effect of olfactory sensory cues on economic decision making," MPRA Paper 75293, University Library of Munich, Germany.
    7. Nicolas Jacquemet & Alexander James & Stéphane Luchini & Jason F. Shogren, 2017. "Referenda Under Oath," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 67(3), pages 479-504, July.
    8. Dominique Ami & Frédéric Aprahamian & Olivier Chanel & Stéphane Luchini, 2011. "A Test of Cheap Talk in Different Hypothetical Contexts: The Case of Air Pollution," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 50(1), pages 111-130, September.
    9. Nicolas Jacquemet & Adam Zylbersztejn, 2014. "What drives failure to maximize payoffs in the lab? A test of the inequality aversion hypothesis," Review of Economic Design, Springer;Society for Economic Design, vol. 18(4), pages 243-264, December.
    10. Oparinde, Adewale & Banerji, Abhijit & Birol, Ekin & Perez, Salomon, 2016. "Identifying hypothetical bias in experimental auctions in field settings in developing countries," 2016 AAAE Fifth International Conference, September 23-26, 2016, Addis Ababa, Ethiopia 246284, African Association of Agricultural Economists (AAAE).
    11. Andreas C. Drichoutis & Stathis Klonaris & Georgia Papoutsi, 2016. "Do good things come in small packages? Willingness to pay for pomegranate wine and bottle size effects," Working Papers 2016-2, Agricultural University of Athens, Department Of Agricultural Economics.
    12. repec:hal:journl:halshs-00611696 is not listed on IDEAS
    13. repec:hal:journl:halshs-00731244 is not listed on IDEAS
    14. Jason F. Shogren & Lusine Tadevosyan, 2011. "Le comportement d'enchérisseur dans une enchère conséquentialiste au second prix," Revue française d'économie, Presses de Sciences-Po, vol. 0(3), pages 13-28.
    15. repec:hal:cesptp:halshs-00611696 is not listed on IDEAS
    16. Dinah Pura T. Depositario & Rodolfo M. Nayga Jr & Yu Yvette Zhang & Robert Dominick E. Mariano, 2014. "Revisiting Cash Endowment and House Money Effects in an Experimental Auction of a Novel Agri-food Product in the Philippines," Asian Economic Journal, East Asian Economic Association, vol. 28(2), pages 201-215, June.
    17. repec:eee:soceco:v:70:y:2017:i:c:p:33-46 is not listed on IDEAS
    18. Nicolas Jacquemet & Robert‐Vincent Joule & Stéphane Luchini & Jason F. Shogren, 2011. "Do People Always Pay Less Than They Say? Testbed Laboratory Experiments with IV and HG Values," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 13(5), pages 857-882, October.
    19. repec:hal:cesptp:halshs-00731244 is not listed on IDEAS
    20. Samuel Ferey & Yannick Gabuthy & Nicolas Jacquemet, 2013. "L'apport de l'économie expérimentale dans l'élaboration des politiques publiques," PSE - Labex "OSE-Ouvrir la Science Economique" halshs-00879205, HAL.
    21. repec:dau:papers:123456789/9717 is not listed on IDEAS

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    Keywords

    Auctions; Demand revelation; Experimental valuation; Hypothetical bias; Earned Money;

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