Sophisticated Bidders in Beauty-Contest Auctons

Stefano Galavotti (), Luigi Moretti and Paola Valbonesi

Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) from HAL

Abstract: We study bidding behavior by firms in beauty-contest auctions, i.e. auctions in which the winning bid is the one which gets closet to some function (average) of all submitted bids. Using a dataset on public procurement beauty-contest auctions, we show that firms' observed bidding behavior departs from equilibrium and can be predicted by a sophistication index, which captures the firms' accumulated capacity of bidding close to optimality in the past. We show that our empirical evidence is consistent with a Cognitive Hierarchy model of bidders' behavior. We also investigate whether and how firms learn to bid strategically through experience.

Keywords: cognitive hierarchy; auctions; beauty-contest; public procurement (search for similar items in EconPapers)
Date: 2017-01
New Economics Papers: this item is included in nep-exp and nep-reg
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-01440891
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Citations: View citations in EconPapers (1)

Published in 2017

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Related works:
Journal Article: Sophisticated Bidders in Beauty-Contest Auctions (2018)
Working Paper: Sophisticated Bidders in Beauty-Contest Auctions (2018)
Working Paper: Sophisticated Bidders in Beauty-Contest Auctions (2018)
Working Paper: Sophisticated Bidders in Beauty-Contest Auctons (2017)
Working Paper: Sophisticated Bidders in Beauty-Contest Auctions (2017)
Working Paper: Sophisticated Bidders In Beauty-Contest Auctions (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:cesptp:halshs-01440891

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