Reservation Values and Regret in Laboratory First‐Price Auctions: Context and Bidding Behavior

C-Tier
Journal: Southern Economic Journal
Year: 2012
Volume: 78
Issue: 4
Pages: 1163-1180

Authors (2)

Theodore L. Turocy (University of East Anglia) Elizabeth Watson (not in RePEc)

Score contribution per author:

0.503 = (α=2.01 / 2 authors) × 0.5x C-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

Recent articles hypothesize that an asymmetry in regret motivates aggressive bidding in laboratory first‐price auctions. Subjects emphasize potential earnings foregone from being outbid. Proposed motivators of this asymmetry include the one‐to‐one relationship in the auction between winning and positive earnings and the ex post knowledge that bidders who do not win the auction know they earned less than the winning bidder. We design a novel implementation of the first‐price auction environment in which these characteristics are not present, while leaving unchanged the expected‐earnings maximizing bidding strategy against any fixed beliefs about the bidding behavior of others. Bidding is significantly less aggressive in this treatment. These findings support the hypothesis that aggressive bidding is motivated in part by features of the protocol for incentivizing subjects that are not essential to the auction environment.

Technical Details

RePEc Handle
repec:wly:soecon:v:78:y:2012:i:4:p:1163-1180
Journal Field
General
Author Count
2
Added to Database
2026-01-29