An Experimental Investigation of Entry Cost Effects in Sealed Bid Dollar Auctions

Surajeet Chakravarty and Sudeep Ghosh
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Surajeet Chakravarty: Department of Economics, University of Exeter
Sudeep Ghosh: Faculty of Business, Hong Kong Polytechnic University

No 1007, Discussion Papers from University of Exeter, Department of Economics

Abstract: In numerous auction settings potential bidders incur costs to enter the auction. Such costs may potentially influence bidder’s behavior subsequently. In this paper we experimentally study the effect of entry costs on bidding and entry behavior, through a complete information common value auction. We run first and second price auctions both with and without entry costs. We find that with entry costs, players on average bid lower in first price auctions, while in second price auctions the average bids are higher, compared to bids in the corresponding no entry fee auctions.

Keywords: Common Value Auctions; Entry Costs; Experiments (search for similar items in EconPapers)
Date: 2010
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Persistent link: https://EconPapers.repec.org/RePEc:exe:wpaper:1007

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