The nature of information and its effect on bidding behavior: Laboratory evidence in a first price common value auction

Isabelle Brocas, Juan D. Carrillo and Manuel Castro

Journal of Economic Behavior & Organization, 2015, vol. 109, issue C, 26-40

Abstract: We study in the laboratory a series of first price sealed bid auctions of a common value good. Bidders face three types of information: private information, public information and common uncertainty. Auctions are characterized by the relative size of these three information elements. Only half of our subjects bid differently depending on whether the last piece of information obtained is private or public but they do not react to each type of information as predicted by theory. The other half of the subjects do not distinguish between private and public information and either consistently underbid or consistently overbid.

Keywords: Laboratory experiments; Common value auctions; Winner's curse (search for similar items in EconPapers)
JEL-codes: C92 D44 D82 (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:109:y:2015:i:c:p:26-40

DOI: 10.1016/j.jebo.2014.10.015

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