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Anchoring effects in repeated auctions of homogeneous objects: Evidence from Macao

Peter M.W. Chui, Lawrence Hoc Nang Fong, Jinjuan Ren and Lewis H.K. Tam

Journal of Economic Psychology, 2022, vol. 90, issue C

Abstract: We provide evidence of anchoring effects from the sealed-bid auctions of vehicle plates in Macao. Vehicle plates are homogeneous in use value and differ only in character and numerical sequences. Nevertheless, vehicle plates with particular numerical sequences are consistently and repeatedly auctioned off in Macao, thus providing unique panel data that facilitate the identification of an anchoring effect. We adopt a hedonic pricing model to estimate the rational price of vehicle plates. We find that when bidding on a numerical sequence, bidders anchor on the winning bid in the previous auction, which result in continuation of the winning bid price.

Keywords: Anchoring; Auction; Hedonic pricing; Sealed bid; Vehicle plates (search for similar items in EconPapers)
JEL-codes: D44 D91 G41 (search for similar items in EconPapers)
Date: 2022
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DOI: 10.1016/j.joep.2022.102514

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