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Posted Prices and Bid Affiliation: Evidence from Experimental Auctions

  • Jay R. Corrigan
  • Matthew C. Rousu

In most experimental auctions, researchers ask participants to bid on the same item in multiple potentially binding rounds, posting the price submitted by the top bidder or bidders after each of those rounds. If bids submitted in later rounds are affiliated with posted prices from earlier rounds, this practice could result in biased value estimates. In this article we discuss the results of an experiment designed explicitly to test whether posted prices affect bidding behavior. We find that for familiar items, high posted prices lead to increased bids in subsequent rounds. Our results have implications for researchers conducting experimental auctions.

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File URL: http://economics.kenyon.edu/corrigan/publications/Posted%20Prices.pdf
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Paper provided by Kenyon College, Department of Economics in its series Working Papers with number 0602.

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Date of creation: Nov 2006
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Handle: RePEc:ken:wpaper:0602
Contact details of provider: Web page: http://economics.kenyon.edu/

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  31. Jay R. Corrigan & Matthew C. Rousu, 2006. "The Effect of Initial Endowments in Experimental Auctions," Working Papers 0601, Kenyon College, Department of Economics.
  32. Lusk, Jayson L. & Alexander, Corinne E. & Rousu, Matthew C., 2004. "Designing Experimental Auctions For Marketing Research: Effect Of Values, Distributions, And Mechanisms On Incentives For Truthful Bidding," 2004 Annual meeting, August 1-4, Denver, CO 20202, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
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