 When Does an Incentive for Free Riding Promote Rational Bidding?James Cox and
Stephen C. Hayne
Chapter Chapter 7 in Experimental Business Research, 2005, pp 133-149 from Springer Abstract: Abstract Economics has focused on models of individual rational agents. But many important decisions are made by small groups such as families, management teams, boards of directors, central bank boards, juries, appellate courts, and committees of various types. For example, bid amounts in common value auctions such as the Outer Continental Shelf oil lease auction are typically decided by committees. Previous experimental research with natural groups has found that group bidders are significantly less rational than individual bidders in how they use information in common value auctions. Experiments reported here involve cooperative and non-cooperative nominal groups. The unequal profit-sharing rule applied to non-cooperative nominal groups creates an incentive to free ride within the bidding groups. This incentive to free ride tends to offset the winner’s curse and promote rational bidding. Keywords: Bidding Period; Experimental Dollar; Auction Period; Rival Bidder; Individual Rational Agent (search for similar items in EconPapers) There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it. Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-0-387-24243-9_7 Ordering information: This item can be ordered from Access Statistics for this chapter More chapters in Springer Books from Springer |
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