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Time Pressure and Risk Taking in Auctions: A Field Experiment

Author

Listed:
  • Anouar El Haji

    (Amsterdam Business School, University of Amsterdam)

  • Michał Krawczyk

    (Faculty of Economic Sciences, University of Warsaw)

  • Marta Sylwestrzak

    (Faculty of Economic Sciences, University of Warsaw)

  • Ewa Zawojska

    (Faculty of Economic Sciences, University of Warsaw)

Abstract

Auctions often require risk taking under time pressure. However, little is known about how time pressure moderates the relationship between uncertainty of outcomes and bidding behavior. This study consists of a field experiment in which participants are invited to a Vickrey auction to elicit their willingness to pay for a lottery ticket. The time available to place a bid and also the skewness of the lottery (holding the expected value constant) are systematically manipulated. We find that under high time pressure participants are less likely to place a bid at all. Furthermore, participants who do place a bid under high time pressure bid significantly less than participants under low time pressure. The main finding is thus that increased time pressure significantly decreases risk taking. The effect seems to be particularly strong for the lottery with a high probability of winning and for female subjects.

Suggested Citation

  • Anouar El Haji & Michał Krawczyk & Marta Sylwestrzak & Ewa Zawojska, 2016. "Time Pressure and Risk Taking in Auctions: A Field Experiment," Working Papers 2016-04, Faculty of Economic Sciences, University of Warsaw.
    • Handle: RePEc:war:wpaper:2016-04
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    File URL: http://www.wne.uw.edu.pl/index.php/download_file/2438/
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    References listed on IDEAS

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    Cited by:

    1. Martin G. Kocher & David Schindler & Stefan T. Trautmann & Yilong Xu, 2019. "Risk, time pressure, and selection effects," Experimental Economics, Springer;Economic Science Association, vol. 22(1), pages 216-246, March.
    2. Katarzyna Gawryluk & Michal Krawczyk, 2017. "Probability weighting under time pressure: applying the double-response method," Working Papers 2017-08, Faculty of Economic Sciences, University of Warsaw.
    3. Thomas Buser & Roel van Veldhuizen & Yang Zhong, 2022. "Time Pressure Preferences," Tinbergen Institute Discussion Papers 22-054/I, Tinbergen Institute.
    4. De Paola, Maria & Gioia, Francesca & Pupo, Valeria, 2020. "Selection and Incentives under Time Pressure: The Importance of Framing," IZA Discussion Papers 13474, Institute of Labor Economics (IZA).

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    More about this item

    Keywords

    Internet auctions; Vickrey auction; risk taking; time pressure;
    All these keywords.

    JEL classification:

    • C9 - Mathematical and Quantitative Methods - - Design of Experiments
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions

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