Bidding behaviour in experimental auctions under risk and uncertainty

Chloe S. McCallum (), Simone Cerroni, Daniel Derbyshire, W. George Hutchinson and Rodolfo Nayga
Additional contact information
Chloe S. McCallum: Queen’s University Belfast
Simone Cerroni: University of Trento
Daniel Derbyshire: Queen’s University Belfast
W. George Hutchinson: Queen’s University Belfast

Theory and Decision, 2025, vol. 98, issue 3, No 1, 323-349

Abstract: Abstract This paper explores bidding behaviour under risk and uncertainty using the Becker-DeGroot-Marschak mechanism (BDM) and second price auction (SPA). It investigates whether values elicited via the two mechanisms are consistent and whether bidding behaviour can be influenced by differences in the number and type of sources of risk and uncertainty that people face when exposed to the two mechanisms. In our experiment, subjects are exposed to non-monetary lotteries where they bid for a high-quality seafood product, but there is a chance (known or unknown) that they receive a lower quality seafood product instead. Results indicate that bidding behaviour can be influenced by the number and type of sources of risk and uncertainty that subjects face and subjects’ bidding behaviour is only consistent with standard theories of decision making under risk and uncertainty when they bid on a risky product in the SPA. Despite this, BDM and SPA elicit equal values under risk and uncertainty in this study.

Keywords: Risk; Uncertainty; Becker-DeGroot-Marschak mechanism; Second price auction; Non-monetary lotteries (search for similar items in EconPapers)
Date: 2025
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1007/s11238-024-10005-z Abstract (text/html)
Access to full text is restricted to subscribers.

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: https://EconPapers.repec.org/RePEc:kap:theord:v:98:y:2025:i:3:d:10.1007_s11238-024-10005-z

Ordering information: This journal article can be ordered from
http://www.springer. ... ry/journal/11238/PS2

DOI: 10.1007/s11238-024-10005-z

Access Statistics for this article

Theory and Decision is currently edited by Mohammed Abdellaoui

More articles in Theory and Decision from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().