An experimental study of a continuous Japanese-English auction for the wallet game

Konstantinos Georgalos, Ricardo Gonçalves, Indrajit Ray and Sonali SenGupta

No 2026/01, QBS Working Paper Series from Queen's University Belfast, Queen's Business School

Abstract: This paper reports results from a laboratory experiment on a continuous Japanese-English auction in a common-value 'wallet game'. The main objective is to test whether bidders follow the equilibrium bidding strategy predicted by theory. We find systematic deviations from equilibrium behaviour: instead of bidding according to the Nash equilibrium, subjects appear to rely on expected value (EV) bidding. As a consequence, observed auction prices are higher than the theoretical benchmark, and the winner's curse occurs in a substantial fraction of auctions. We analyse bidding behaviour in detail and discuss the implications of our findings.

Keywords: Japanese-English auction (JEA); Wallet game; Continuous bids; Winner’s curse; Expected value bidding (search for similar items in EconPapers)
JEL-codes: C72 C91 C92 D63 D83 (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:qmsrps:202601

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