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Preferences and Decision Support in Competitive Bidding

Listed author(s):
  • Fugger, Nicolas
  • Gillen, Philippe
  • Rasch, Alexander
  • Zeppenfeld, Christopher

We examine bidding behavior in first-price sealed-bid and Dutch auctions, which are strategically equivalent under standard preferences. We investigate whether the empirical breakdown of this equivalence is due to (non-standard) preferences or due to the different complexity of the two formats, i.e., a different level of mathematical or individual sophistication. First, we elicit measures of individual preferences and secondly manipulate the degree of complexity by offering various levels of decision support. Our results show that the equivalence of the two auction formats only breaks down in the absence of decision support. This indicates that the empirical breakdown is caused by differing complexity between the two formats rather than non-standard preferences.

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File URL: https://www.econstor.eu/bitstream/10419/145849/1/VfS_2016_pid_6926.pdf
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Paper provided by Verein für Socialpolitik / German Economic Association in its series Annual Conference 2016 (Augsburg): Demographic Change with number 145849.

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Date of creation: 2016
Handle: RePEc:zbw:vfsc16:145849
Contact details of provider: Web page: http://www.socialpolitik.org/
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