Heterogeneous bids in auctions with rational and markdown bidders - Theory and Experiment
Oliver Kirchkamp () and
J. Philipp Reiss
No 2008-066, Jena Economic Research Papers from Friedrich-Schiller-University Jena
We present results from a series of experiments that allow us to measure overbidding and, in particular, underbidding in first-price auctions. We investigate how the amount of underbidding depends on seemingly innocent parameters of the experimental setup. To structure our data we present and test a theory of constant markdown bids. While a fraction of bidders can be well described by Bayesian Nash equilibrium bids, a larger fraction seems to either use constant markdown bids or seems to rationally optimise against a population where some members use markdown bids and some are rational.
Keywords: Auction; Experiment; Overbidding; Underbidding; Risk-Aversion (search for similar items in EconPapers)
JEL-codes: C92 D44 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-exp, nep-gth and nep-upt
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Persistent link: https://EconPapers.repec.org/RePEc:jrp:jrpwrp:2008-066
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