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Round Bidding in Auctions

Author

Listed:
  • Mark van Oldeniel
  • Christopher M. Snyder
  • Adriaan R. Soetevent

Abstract

Our analysis of novel data from hundreds of thousands of online auctions on a large platform operating in the Netherlands uncovers a tendency to bid round numbers. Round winning bids are higher than average for a given item and are eschewed by bidders as they gain experience. These findings lead us to hypothesize that, rather than delivering a strategic benefit (say, adding salience to a jump bid), round bidding is a symptom of a behavioral bias. We construct a structural model of behavioral bidding in auctions, estimated for each of a subsample of the most frequently auctioned items. Our median estimate is that 21% of bidders are prone to round-number bias, reducing their expected surplus by nearly 10%.

Suggested Citation

  • Mark van Oldeniel & Christopher M. Snyder & Adriaan R. Soetevent, 2025. "Round Bidding in Auctions," NBER Working Papers 34564, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:34564
    Note: IO LE
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    More about this item

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms

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