Learning to bid, but not to quit – Experience and Internet auctions

Jens-Martin Bramsen ()

MPRA Paper from University Library of Munich, Germany

Abstract: A classic argument in economics is that experience in the market place will eliminate mistakes and cognitive biases. Internet auctions are a popular market were some bidders gather extensive experience. In a unique data set from a Scandinavian auction site I question if and what bidders learn. At face value experienced bidders do adapt better bidding strategies. However, the so-called pseudo-endowment effect does not disappear. Regardless of their experience, bidders will be inclined to increase their willingness to pay as a response to having had “ownership” (the leading bid) before being outbid. Thus, this data can confirm that feedback, and especially negative feedback, seems to be a critical component in learning.

Keywords: Experience; Learning; Internet auctions; Reference-Dependent Preferences; Endowment Effect; Bidding behavior; eBay. (search for similar items in EconPapers)
JEL-codes: D12 D44 D83 (search for similar items in EconPapers)
Date: 2008-06
New Economics Papers: this item is included in nep-exp and nep-neu
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:14815

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