On the impact of low-balling: Experimental results in asymmetric auctions

Paul Pezanis-Christou

International Journal of Game Theory, 2002, vol. 31, issue 1, 69-89

Abstract: The paper reports on a series of asymmetric auction experiments with private-independent values and two buyers. Maskin and Riley (2000) showed, under some conditions, that if one buyer has a greater probability than the other of not being able to bid, first-price auctions could yield lower revenues to the seller than second-price auctions. The data rejected this prediction because of an important overbidding when subjects received low values in first-price auctions. In this asymmetric setting, the observed overbidding cannot be explained by the usual risk aversion hypothesis and the detection of a learning pattern indicates that subjects used more an adaptive behaviour than a static one. An ad hoc bidding strategy for the buyers who are the most likely to bid explains the observed low bids better than the risk neutral equilibrium strategy. Finally, as subjects appear to have bid in equilibrium as if there were two other competitors instead of only one, their bidding behaviour can be thought to have displayed an over anxiousness about winning.

Keywords: Auctions; ·; Asymmetric; Buyers; ·; Private-Independent; Values; ·; Experimental; Economics (search for similar items in EconPapers)
Date: 2002-10-02
Note: Received: January 1999/Final version June 2001 received low values in first-price auctions. In this asymmetric setting, the observed overbidding cannot be explained by the usual risk aversion hypothesis and the detection of a learning pattern indicates that subjects used more an adaptive behaviour than a static one. An ad hoc bidding strategy for the buyers who are the most likely to bid explains the observed low bids better than the risk neutral equilibrium strategy. Finally, as subjects appear to have bid in equilibrium as if there were two other competitors instead of only one, their bidding behaviour can be thought to have displayed an over anxiousness about winning.
References: Add references at CitEc
Citations: View citations in EconPapers (21)

Downloads: (external link)
http://link.springer.de/link/service/journals/00182/papers/2031001/20310069.pdf (application/pdf)
Access to the full text of the articles in this series is restricted

Related works:
Working Paper: On the Impact of Low-Balling: Experimental Results in Asymmetric Auctions (1997)
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:spr:jogath:v:31:y:2002:i:1:p:69-89

Ordering information: This journal article can be ordered from
http://www.springer. ... eory/journal/182/PS2

Access Statistics for this article

International Journal of Game Theory is currently edited by Shmuel Zamir, Vijay Krishna and Bernhard von Stengel

More articles in International Journal of Game Theory from Springer, Game Theory Society
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().