Auctions with Anticipated Regret
Emel Filiz Ozbay and
Erkut Ozbay ()
Experimental from University Library of Munich, Germany
This paper demonstrates theoretically and experimentally that in first price auctions, overbidding with respect to risk neutral Nash equilibrium might be driven from anticipated loser regret (felt when bidders lose at an affordable price). Different information structures are created to elicit regret: bidders know they will learn the winning bid if they lose (loser regret condition); or the second highest bid if they win (winner regret condition); or no information regarding the other bids. Bidders only in loser regret condition anticipated regret and significantly overbid; in the other conditions bidders did not anticipate regret and hence did not overbid.
Keywords: overbidding; first price auction; anticipated regret (search for similar items in EconPapers)
JEL-codes: D44 C91 (search for similar items in EconPapers)
Note: Type of Document - pdf; pages: 39
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Persistent link: https://EconPapers.repec.org/RePEc:wpa:wuwpex:0511006
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