Regret and Feedback Information in First-Price Sealed-Bid Auctions

Richard Engelbrecht-Wiggans () and Elena Katok ()
Additional contact information
Richard Engelbrecht-Wiggans: College of Business, University of Illinois at Urbana-Champaign, Champaign, Illinois 61820

Management Science, 2008, vol. 54, issue 4, 808-819

Abstract: We investigate the effect of regret-related feedback information on bidding behavior in sealed-bid first-price auctions. Two types of regret are possible in this auction format. A winner of the auction may regret paying too much relative to the second highest bid, and a loser may regret missing an opportunity to win at a favorable price. In theory, under very general conditions, being sensitive to winning and paying too much should result in lower average bids, and being sensitive to missing opportunities to win at a favorable price should result in higher bids. For example, the U.S. Government's policy of revealing losing bids may cause regret-sensitive bidders to anticipate regret and bid conservatively, decreasing the government's revenue. We test these predictions in the laboratory and find strong support for both.

Keywords: auctions; competitive bidding; regret; learning; experimental economics (search for similar items in EconPapers)
Date: 2008
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (71)

Downloads: (external link)
http://dx.doi.org/10.1287/mnsc.1070.0806 (application/pdf)

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:inm:ormnsc:v:54:y:2008:i:4:p:808-819

Access Statistics for this article

More articles in Management Science from INFORMS Contact information at EDIRC.
Bibliographic data for series maintained by Chris Asher ().