Getting Carried Away in Auctions as Imperfect Value Discovery
Bidders in auctions must decide whether and when to incur the cost of estimating the most they are willing to pay. This can explain why people seem to get carried away, bidding higher than they had planned before the auction and then finding they had paid more than the object was worth to them. Even when such behavior is rational, ex ante, it may be perceived as irrational if one ignores other situations in which people revise their bid ceilings upwards and are happy when that enables them to win the auction.
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- Alvin E. Roth & Axel Ockenfels, .
"Last-Minute Bidding and the Rules for Ending Second-Price Auctions: Evidence from eBay and Amazon Auctions on the Internet,"
Papers on Strategic Interaction
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CIRJE-F-127, CIRJE, Faculty of Economics, University of Tokyo.
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Econometric Society, vol. 68(1), pages 135-148, January.
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RAND Journal of Economics,
The RAND Corporation, vol. 33(1), pages 1-21, Spring.
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- John Asker, 2000. "Bidding up, buying out and cooling-off: an examination of auctions with withdrawal rights," Economic Theory, Springer, vol. 16(3), pages 585-611.
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