Price Information and Bidding Behavior in Repeated Second-Price Auctions PDF Download
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Author: John A. List
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Book Description
Examining panel data on bidding behavior in over forty second-price auction markets with repeated trials, we observe that (i) posted prices influence the behavior of the median naive bidder; (ii) posted prices do not affect the behavior of the median experienced bidder or the bidder for familiar goods; and (iii) anticipated strategic behavior wanes after two trials. The results suggest that while affiliation might exist in auctions for new goods, the repeated trial design with nonprice information removes the correlation of values and provides the experience that bidders need to understand the market mechanism.
Author: John A. List
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Book Description
Examining panel data on bidding behavior in over forty second-price auction markets with repeated trials, we observe that (i) posted prices influence the behavior of the median naive bidder; (ii) posted prices do not affect the behavior of the median experienced bidder or the bidder for familiar goods; and (iii) anticipated strategic behavior wanes after two trials. The results suggest that while affiliation might exist in auctions for new goods, the repeated trial design with nonprice information removes the correlation of values and provides the experience that bidders need to understand the market mechanism.
Author: David J. Cooper
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Book Description
This paper presents results from a series of second price private value auction (SPA) experiments in which bidders are either given for free, or are allowed to purchase, noisy signals about their opponents' value. Even though theoretically such information about opponents' value has no strategic use in the SPA, it provides us with a convenient instrument to change bidders' perception about the "strength" (i.e., the value) of their opponent. We argue that the empirical relationship between the incidence and magnitude of overbidding and bidders' perception of the strength of their opponent provides the key to understand whether overbidding in second price auctions are driven by "spite" motives or by the "joy of winning." The experimental data show that bidders are much more likely to overbid, though less likely to submit large overbid, when they perceive their rivals to have similar values as their own. We argue that this empirical relationship is more consistent with a modified "joy of winning" hypothesis than with the "spite" hypothesis. However, neither of the non-standard preference explanations are able to fully explain all aspects of the experimental data, and we argue for the important role of bounded rationality. We also find that bidder heterogeneity plays an important role in explaining their bidding behavior.
Author: Radovan Vadovic
Publisher:
ISBN:
Category :
Languages : en
Pages : 180
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Book Description
In this dissertation I study bidding behavior in Internet Auction Markets. I focus on practice called"multiple bidding" which occurs when a single bidder places numerous bids throughout the same auction. Multiple bidding appears frequently in the data but the incentives that motivate it are not well understood. In the first chapter I develop a theoretical model in which multiple bidding is an equilibrium behavior by rational bidders. The model has a dynamic auction with two bidders who can search for outside prices while bidding in the auction. Each bidder has a search cost which is her private information. When outside prices are private (independently drawn and identically distributed), then, there is an equilibrium in which bidders with the lower search costs bid only late and always search, while the bidders with higher search costs bid both early and late and search as if they coordinated their search decisions, i.e., the bidder with the lower search cost searches and the other bidder does not. This equilibrium by itself provides an explanation of two frequently occurring bidding patterns (late and multiple bidding). In the second chapter I study experimentally the effect of early bids in dynamic auctions on how bidders search for outside prices. The design has two bidders participating in an ascending clock-auction during which any one of the bidders can pause the auction clock. This I interpret as placing an early bid. Once the auction is paused both bidders can simultaneously search for an alternative outside price. Results indicate that pausing decisions by subjects impact their subsequent searching for outside prices, i.e., whether a subject decides to search or not depends on whether she has paused the auction or not. Subjects behave as if they coordinated their searching decisions: the bidder who pauses the auction also searches with high frequency and the other bidder does not. Because this type of behavior increases both the efficiency and the profitability of the auction we favor the use of policies that promote early bidding inpractice, such as, longer auctions and lower public reserve prices.
Author: John H. Kagel
Publisher: Princeton University Press
ISBN: 0691218951
Category : Business & Economics
Languages : en
Pages : 419
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Book Description
An invaluable account of how auctions workâand how to make them work Few forms of market exchange intrigue economists as do auctions, whose theoretical and practical implications are enormous. John Kagel and Dan Levin, complementing their own distinguished research with papers written with other specialists, provide a new focus on common value auctions and the "winner's curse." In such auctions the value of each item is about the same to all bidders, but different bidders have different information about the underlying value. Virtually all auctions have a common value element; among the burgeoning modern-day examples are those organized by Internet companies such as eBay. Winners end up cursing when they realize that they won because their estimates were overly optimistic, which led them to bid too much and lose money as a result. The authors first unveil a fresh survey of experimental data on the winner's curse. Melding theory with the econometric analysis of field data, they assess the design of government auctions, such as the spectrum rights (air wave) auctions that continue to be conducted around the world. The remaining chapters gauge the impact on sellers' revenue of the type of auction used and of inside information, show how bidders learn to avoid the winner's curse, and present comparisons of sophisticated bidders with college sophomores, the usual guinea pigs used in laboratory experiments. Appendixes refine theoretical arguments and, in some cases, present entirely new data. This book is an invaluable, impeccably up-to-date resource on how auctions work--and how to make them work.
Author: Ji Yong Lee
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Book Description
This paper examines what connection, if any, there is between cognitive ability and bidding strategy in second price auctions. Despite truthful revelations being a weakly dominant strategy, previous experiments have consistently observed overbidding, which makes the use of such auctions for inferring homegrown values problematic. Examining the effect of cognitive ability is important, as it may help identify when one can reliably recover values from observed bids. The results indicate that more cognitively able subjects behave in closer accordance with theory, and that cognitive ability partially explains heterogeneity in bidding behavior. Our results suggest that considering subjects' cognitive ability in homegrown valuation studies can help identify the true underlying demand conditions.
Author: David Easley
Publisher: Cambridge University Press
ISBN: 1139490303
Category : Computers
Languages : en
Pages : 745
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Book Description
Are all film stars linked to Kevin Bacon? Why do the stock markets rise and fall sharply on the strength of a vague rumour? How does gossip spread so quickly? Are we all related through six degrees of separation? There is a growing awareness of the complex networks that pervade modern society. We see them in the rapid growth of the internet, the ease of global communication, the swift spread of news and information, and in the way epidemics and financial crises develop with startling speed and intensity. This introductory book on the new science of networks takes an interdisciplinary approach, using economics, sociology, computing, information science and applied mathematics to address fundamental questions about the links that connect us, and the ways that our decisions can have consequences for others.
Author: Prasenjit Banerjee
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Book Description
When valuing market and non-market goods, using point estimates of willingness to pay (WTP) may generate biased results because people are often observed to have a range of acceptable values in mind. We investigate how individuals express their bids or WTP given uniform and skewed intervals of private values in the lab with two demand-revealing auction mechanisms -- a second-price auction and a random nth-price auction. The participants are allowed to bid in intervals. Since our participants face the risks of losing the auction and/or money due to uncertainties over private values and market price, we explore the effect of risk preferences on bidding behaviour. We find that (i) participants mostly bid in intervals; (ii) risk-averse participants prefer to bid in point estimates across the auction types; (iii) participants bid truthfully in the second-price auction given skewed interval values; (iv) the random nth-price auction, however, performs better than the second-price auction in extracting the true values given uniform interval values and left-skewed interval values, when we divide the skewed intervals into left- and right-skewed intervals; and (v) the mean of interval bids can be used to derive the demand for true WTP for a good with value uncertainty. We also find that risk-loving individuals overbid significantly, but risk preferences do not affect overall bidding behaviour.
Author: Alvin E. Roth
Publisher:
ISBN:
Category : Auctions
Languages : en
Pages : 47
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Book Description
There is a great deal of late bidding on internet second price auctions. We show that this need not result from either common value properties of the objects being sold, or irrational behavior: late bidding can occur at equilibrium even in private value auctions. The reason is that very late bids have a positive probability of not being successfully submitted, and this opens a way for bidders to implicitly collude, and avoid bidding wars, in auctions such as those run by eBay, which have a fixed end time. A natural experiment is available because the auctions on Amazon, while operating under otherwise similar rules, do not have a fixed end time, but continue if necessary past the scheduled end time until ten minutes have passed without a bid. The strategic differences in the auction rules are reflected in the auction data by significantly more late bidding on eBay than on Amazon. Futhermore, more experienced bidders on eBay submit late bids more often than do less experienced bidders, while the effect of experience on Amazon goes in the opposite direction. On eBay, there is also more late bidding for antiques than for computers. We also find scale independence in the distribution over time of bidders' last bids, of a form strikingly similar to the deadline effect' noted in bargaining: last bids are distributed according to a power law. The evidence suggests that multiple causes contribute to late bidding, with strategic issues related to the rules about ending the auction playing an important role
Author: Song Yao
Publisher: Now Publishers Inc
ISBN: 1601982283
Category : Brand loyalty
Languages : en
Pages : 66
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Book Description
Sponsored Search Auctions reviews current academic research on this nascent topic with a focus on future practical and research opportunities
Author: Paul Milgrom
Publisher: Cambridge University Press
ISBN: 1139449168
Category : Business & Economics
Languages : en
Pages : 378
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Book Description
This book provides a comprehensive introduction to modern auction theory and its important new applications. It is written by a leading economic theorist whose suggestions guided the creation of the new spectrum auction designs. Aimed at graduate students and professionals in economics, the book gives the most up-to-date treatments of both traditional theories of 'optimal auctions' and newer theories of multi-unit auctions and package auctions, and shows by example how these theories are used. The analysis explores the limitations of prominent older designs, such as the Vickrey auction design, and evaluates the practical responses to those limitations. It explores the tension between the traditional theory of auctions with a fixed set of bidders, in which the seller seeks to squeeze as much revenue as possible from the fixed set, and the theory of auctions with endogenous entry, in which bidder profits must be respected to encourage participation.
