A Comparison of Naive and Experienced Bidders in Common Value Offer Auctions: A Laboratory Analysis

Douglas Dyer, John Kagel and Dan Levin ()

Economic Journal, 1989, vol. 99, issue 394, 108-15

Abstract: Experiments compare bidding behavior of experienced business executives in the construction contract industry with that of student subjects in efforts to identify differences in behavior between "naive" and "expert" subjects. Qualitatively similar behavior is reported across subject pools as in both cases (1) bidders suffer from the "winner's curse"; (2) increasing the number of bidders exacerbates the winner's curse; and (3) public information reducing uncertainty in cost estimates has the perverse effect (relative to Nash equilibrium bidding theory) of increasing the offer price in the presence of a winner's curse. Copyright 1989 by Royal Economic Society.

Date: 1989
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Related works:
Working Paper: A COMPARISON OF NAIVE AND EXPERIENCED BIDDERS IN COMMON VALUE OFFER AUCTIONS A LABORATORY ANALYSIS (1988)
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