Loss aversion and learning to bid

Dennis Alexis Valin Dittrich (), Werner Güth (), Martin Georg Kocher () and Paul Pezanis-Christou ()

Papers on Strategic Interaction from Max Planck Institute of Economics, Strategic Interaction Group

Abstract: Bidding challenges learning theories since experiences for the same bid vary stochastically: the same choice can result in a gain or a loss. In such an environment the question arises how the nearly universally documented phenomenon of loss aversion affects the adaptive dynamics. We analyze the impact of loss aversion in a simple auction for different learning theories. Our experimental results suggest that a version of reinforcement learning which accounts for loss aversion fares as well as more sophisticated alternatives.

Keywords: loss aversion; bidding; auction; experiment; learning (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-exp
View list of references View citations in EconPapers

Downloads: (external link)
ftp://papers.mpiew-jena.mpg.de/esi/discussionpapers/2005-03.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:esi:discus:2005-03

Ordering information: This working paper can be ordered from
http://www.econ.mpg. ... arch/ESI/discuss.php

Access Statistics for this paper

More papers in Papers on Strategic Interaction from Max Planck Institute of Economics, Strategic Interaction Group
Contact information at EDIRC.
Series data maintained by Karin Richter ().