Round Bidding in Auctions

Mark van Oldeniel, Christopher Snyder and Adriaan Soetevent

No 34564, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Our analysis of novel data from hundreds of thousands of online auctions on a large platform operating in the Netherlands uncovers a tendency to bid round numbers. Round winning bids are higher than average for a given item and are eschewed by bidders as they gain experience. These findings lead us to hypothesize that, rather than delivering a strategic benefit (say, adding salience to a jump bid), round bidding is a symptom of a behavioral bias. We construct a structural model of behavioral bidding in auctions, estimated for each of a subsample of the most frequently auctioned items. Our median estimate is that 21% of bidders are prone to round-number bias, reducing their expected surplus by nearly 10%.

JEL-codes: D44 D83 D91 L11 (search for similar items in EconPapers)
Date: 2025-12
Note: IO LE
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