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Out-of equilibrium bids in auctions - Wrong expectations or wrong bids

Author

Listed:
  • Oliver Kirchkamp

    () (University of Jena, School of Economics)

  • J. Philipp Reiß

    () (Maastricht University, Economics Department)

Abstract

Deviations from equilibrium bids in auctions can be related to inconsistent expectations with correct best replies (see Eyster and Rabin, 2005; Crawford and Iriberri, 2007) or correct expectations but small (perhaps quantal-response) mistakes in best replies (see Goeree et al., 2002). To distinguish between these two explanations we use a novel experimental procedure and study expectations together with best replies. We extensively test the internal validity of this setup. We ?nd that deviations from equilibrium bids do not seem to be due to wrong expectations but due to deviations from a best reply.

Suggested Citation

  • Oliver Kirchkamp & J. Philipp Reiß, 2008. "Out-of equilibrium bids in auctions - Wrong expectations or wrong bids," Jena Economic Research Papers 2008-021, Friedrich-Schiller-University Jena.
  • Handle: RePEc:jrp:jrpwrp:2008-021
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    File URL: http://zs.thulb.uni-jena.de/receive/jportal_jparticle_00098554
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    Cited by:

    1. Marco Pagnozzi & Krista Jabs Saral, 2013. "Multi-Object Auctions with Resale: An Experimental Analysis," CSEF Working Papers 328, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.

    More about this item

    Keywords

    Experiments; Auction; Expectations;

    JEL classification:

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

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