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Repeated Rounds with Price Feedback in Experimental Auction Valuation: An Adversarial Collaboration
Author(s) -
Corrigan Jay R.,
Drichoutis Andreas C.,
Lusk Jayson L.,
Nayga Rodolfo M.,
Rousu Matthew C.
Publication year - 2012
Publication title -
american journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.949
H-Index - 111
eISSN - 1467-8276
pISSN - 0002-9092
DOI - 10.1093/ajae/aar066
Subject(s) - revenue equivalence , bidding , microeconomics , economics , vickrey auction , generalized second price auction , valuation (finance) , auction theory , english auction , dutch auction , vickrey–clarke–groves auction , commit , preference , reverse auction , computer science , finance , database
It is generally thought that market outcomes are improved with the provision of market information. As a result, the use of repeated rounds with price feedback has become standard practice in the applied experimental auction valuation literature. We conducted two experiments to determine how rationally subjects behave with and without price feedback in a second‐price auction. Results from an auction for lotteries show that subjects exposed to price feedback are significantly more likely to commit preference reversals. However, this irrationality diminishes in later rounds. Results from an induced value auction indicate that price feedback caused greater deviations from the Nash equilibrium bidding strategy. Our results suggest that while bidding on the same item repeatedly improves auction outcomes (i.e., reduced preference reversals or bids closer to induced values), this improvement is not the result of price feedback.