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Posted Prices and Bid Affiliation: Evidence from Experimental Auctions
Author(s) -
Corrigan Jay R.,
Rousu Matthew C.
Publication year - 2006
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 - 10.1111/j.1467-8276.2006.00917.x
Subject(s) - common value auction , bidding , unique bid auction , value (mathematics) , economics , test (biology) , microeconomics , ask price , affect (linguistics) , business , advertising , auction theory , psychology , computer science , finance , paleontology , communication , biology , machine learning
In most experimental auctions, researchers ask participants to bid on the same item in multiple potentially binding rounds, posting the price submitted by the top bidder or bidders after each of those rounds. If bids submitted in later rounds are affiliated with posted prices from earlier rounds, this practice could result in biased value estimates. In this article, we discuss the results of an experiment designed explicitly to test whether posted prices affect bidding behavior. We find that for familiar items, high posted prices lead to increased bids in subsequent rounds. Our results have implications for researchers conducting experimental auctions.