Arbeitspapier
Knowing Me, Imagining You: Projection and Overbidding in Auctions
Overbidding in auctions has been attributed to e.g. risk aversion, loser regret, level-k, and cursedness, relying on varying identifying assumptions. I argue that \"type projection\'\" organizes these findings and largely captures observed behavior. Type projection formally models that people tend to believe others have object values similar to their own - a robust psychological phenomenon that naturally applies to auctions. First, I show that type projection generates the main behavioral phenomena observed in auctions, including increased sense of competition (\"loser regret\") and broken Bayesian updating (\"cursedness\"). Second, re-analyzing data from seven experiments, I show that type projection explains the stylized facts of behavior across private and common value auctions. Third, in a structural analysis relaxing the identifying assumptions made in earlier studies, type projection consistently captures behavior best, in-sample and out-of-sample. The results reconcile bidding patterns across conditions and have implications for behavioral and empirical analyses as well as policy.
- Sprache
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Englisch
- Erschienen in
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Series: Discussion Paper ; No. 36
- Klassifikation
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Wirtschaft
Noncooperative Games
Design of Experiments: Laboratory, Individual
Auctions
- Thema
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auctions
overbidding
projection
risk aversion
cursed equilibrium
depth of reasoning
- Ereignis
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Geistige Schöpfung
- (wer)
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Breitmoser, Yves
- Ereignis
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Veröffentlichung
- (wer)
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Ludwig-Maximilians-Universität München und Humboldt-Universität zu Berlin, Collaborative Research Center Transregio 190 - Rationality and Competition
- (wo)
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München und Berlin
- (wann)
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2017
- Handle
- Letzte Aktualisierung
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10.03.2025, 11:42 MEZ
Datenpartner
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. Bei Fragen zum Objekt wenden Sie sich bitte an den Datenpartner.
Objekttyp
- Arbeitspapier
Beteiligte
- Breitmoser, Yves
- Ludwig-Maximilians-Universität München und Humboldt-Universität zu Berlin, Collaborative Research Center Transregio 190 - Rationality and Competition
Entstanden
- 2017