Hypothetical thinking and the winner's curse: An experimental investigation

Arbeitspapier

There is evidence that bidders fall prey to the winner's curse because they fail to extract information from hypothetical events - like winning an auction. This paper investigates experimentally whether bidders in a common value auction perform better when the requirements for this cognitive issue - also denoted by contingent reasoning - are relaxed, leaving all other parameters unchanged. The overall pattern of the data suggests that the problem of irrational over- and underbidding can be weakened by giving the subjects ex ante feedback about their bid, but unlike related studies I also find negative effects of additional information.

Angaben zum Objekt

• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: BGPE Discussion Paper ; No. 176

Klassifikation und Themen

• Klassifikation: Wirtschaft ; Auctions ; Asymmetric and Private Information; Mechanism Design ; Search; Learning; Information and Knowledge; Communication; Belief; Unawareness ; Design of Experiments: Laboratory, Individual
• Thema: Hypothetical thinking ; cursed equilibrium ; winner's curse

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Moser, Johannes
• Ereignis: Veröffentlichung
• (wer): Friedrich-Alexander-Universität Erlangen-Nürnberg, Bavarian Graduate Program in Economics (BGPE)
• (wo): Nürnberg
• (wann): 2017

Weitere Informationen

• Handle: http://hdl.handle.net/10419/180155
• Letzte Aktualisierung: 10.03.2025, 11:44 MEZ