Is the Experimental Auction a Dynamic Market?
Jay Corrigan ()
Working Papers from Kenyon College, Department of Economics
Experimental auctions are generally thought of as static markets. This paper presents the results of an experimental auction designed to test whether participants’ perceptions regarding the relative difficulty of delaying or reversing a transaction outside of the experimental market systematically affect their willingness-to-pay bids. The results show that auction participants’ perceptions significantly impact their bids in a manner that is consistent with real option theory. These results suggest that economists must be careful to consider the existence of outside markets when designing experimental auctions.
Keywords: experimental auctions; dynamic markets; real option theory; commitment cost (search for similar items in EconPapers)
JEL-codes: C91 D44 D81 (search for similar items in EconPapers)
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Journal Article: Is the Experimental Auction a Dynamic Market? (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:ken:wpaper:0501
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