Auctions with Anticipated Regret: Theory and Experiment

Emel Filiz-Ozbay and Erkut Ozbay

American Economic Review, 2007, vol. 97, issue 4, 1407-1418

Abstract: This paper demonstrates theoretically and experimentally that in first-price auctions overbidding with respect to the risk neutral Nash equilibrium might be driven from anticipated loser regret (felt when bidders lose at an affordable price). Different information structures are created to elicit regret: bidders know they will learn the winning bid if they lose (loser regret condition); or the second-highest bid if they win (winner regret condition); or they will receive no feedback regarding the other bids. Bidders in loser regret condition anticipated regret and significantly overbid. However, bidders in the winner regret condition did not anticipate regret. (JEL D44)

Date: 2007
Note: DOI: 10.1257/aer.97.4.1407
References: Add references at CitEc
Citations: View citations in EconPapers (205)

Downloads: (external link)
http://www.aeaweb.org/articles.php?doi=10.1257/aer.97.4.1407 (application/pdf)
http://www.aeaweb.org/aer/data/sept07/20050951_data.zip (application/zip)
http://www.aeaweb.org/aer/data/sept07/20050951_app.zip (application/zip)
Access to full text is restricted to AEA members and institutional 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:aea:aecrev:v:97:y:2007:i:4:p:1407-1418

Ordering information: This journal article can be ordered from
https://www.aeaweb.org/journals/subscriptions

Access Statistics for this article

American Economic Review is currently edited by Esther Duflo

More articles in American Economic Review from American Economic Association Contact information at EDIRC.
Bibliographic data for series maintained by Michael P. Albert ().