Journal
GAMES AND ECONOMIC BEHAVIOR
Volume 54, Issue 1, Pages 183-204Publisher
ACADEMIC PRESS INC ELSEVIER SCIENCE
DOI: 10.1016/j.geb.2005.10.001
Keywords
experimental economics; first-price sealed-bid auctions; independent private value model; computerized competitors; bidding theory; risk aversion
Categories
Ask authors/readers for more resources
This article reports the results of an individual choice experiment designed to test the Nash equilibrium predictions of the first-price sealed-bid auction. A subject faced in 100 auctions always the same resale value and competed with computer-simulated bids. The design used between-subjects variation and involved information feedback as the treatment variable. Earlier experimental work on first price auctions has frequently reported an overbidding relative to the risk neutral Nash equilibrium. Our data provide evidence that overbidding can be fostered by the standard information feedback in auction experiments, which, after each auction, reveals the winning bid only. By means of learning direction theory we explain the individual bidding dynamics in our experiment. Finally we apply impulse balance theory and make long run predictions of individual bidding behavior. (c) 2005 Elsevier Inc. All rights reserved.
Authors
I am an author on this paper
Click your name to claim this paper and add it to your profile.
Reviews
Recommended
No Data Available