Nonstandard bidder behavior in real-world auctions

Joseph Uri Podwol and Henry Schneider

European Economic Review, 2016, vol. 83, issue C, 198-212

Abstract: Empirical work on auctions has found that bidders deviate from standard behavior in important ways. We investigate a range of these behaviors, including nonrational herding, auction fever, quasi-endowment effect, and escalation of commitment. Our innovations are to more completely control for unobservables by using new data from a field experiment on eBay, and by accounting for censoring of bids below the starting price. Consistent with standard auction theory and in contrast to the predictions of the nonstandard behaviors, we find that auction starting price has no effect on bidder willingness to pay in a private-values setting. We conclude that there is little evidence that these nonstandard behaviors are important in the field.

Keywords: Auctions; Nonstandard behavior; Experiment (search for similar items in EconPapers)
JEL-codes: D03 D44 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:eecrev:v:83:y:2016:i:c:p:198-212

DOI: 10.1016/j.euroecorev.2015.12.012

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