Bidding Behavior and Decision Costs in Field Experiments

John List and David Reiley ()

No 6, Vanderbilt University Department of Economics Working Papers from Vanderbilt University Department of Economics

Abstract: Whether rationality of economic behavior increases with expected payoffs and decreases with the cognitive cost it takes to formulate an optimal strategy remains an open question. We explore these issues with field data, using individual bids from sealed-bid auctions in which we sold nearly $10,000 worth of sportscards. Our results indicate that stakes do indeed matter, as high-priced ($70) cards produced more of the theoretically predicted strategic behavior than did lower-priced ($3) cards. We find additional evidence consistent with the importance of cognitive costs, as subjects more experienced with sportscard auctions exhibited a greater tendency to behave strategically than did less experienced bidders.

Keywords: Cognitive cost; field experiments; multi-unit auctions (search for similar items in EconPapers)
JEL-codes: C93 D44 (search for similar items in EconPapers)
Date: 2000-03
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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http://www.accessecon.com/pubs/VUECON/vu00-w06.pdf First version, 2000 (application/pdf)

Related works:
Journal Article: Bidding Behavior and Decision Costs in Field Experiments (2002)
Working Paper: Bidding behavior and decision costs in field experiments (2002)
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Persistent link: https://EconPapers.repec.org/RePEc:van:wpaper:0006

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