Understanding Overbidding in Second Price Auctions

An Experimental Study

Dados Bibliográficos

ID9717465
AutoresDavid J Cooper (0000-0003-3391-3538, Florida State University), Hanming Fang (0000-0003-4703-5860, Duke University, SHUFE and CEMA)
Ano2008
Volume118
Fascículo532
Páginas1572-1595
Data de publicação2008-10-01
Peer ReviewedSim
Open AccessSim
TipoARTICLE
PeriódicoThe Economic Journal (JOURNAL)
Identificadores do periódicoISSN: 0013-0133 • E-ISSN: 1468-0297
EditoraOxford University Press (OUP) (PUBLISHER)
DOI10.1111/j.1468-0297.2008.02181.x
OpenAlexW2140098888
IdiomaEN
Citações recebidas6
Referências citadas15

We present results from second price private value auction (SPA) experiments where bidders may receive noisy signals about their opponents' value. Such signals change bidders' perception about the 'strength' of their opponent, and the relationship between bidders' perception of their opponent and overbidding provides a novel channel to understand overbidding in SPA. We found that small and medium overbids are more likely to occur when bidders perceive their rivals to have similar values, supporting a modified 'joy of winning' hypothesis but large overbids are more likely to occur when bidders believe their opponents to have much higher values, consistent with the 'spite' hypothesis. Copyright © The Author(s). Journal compilation © Royal Economic Society 2008

Adversary · Common value auction · Economics · Microeconomics · Perception · Statistics · Value (mathematics · Auction Theory and Applications · Consumer Market Behavior and Pricing · Experimental Behavioral Economics Studies · Mathematics · Psychology