Fishing for fools

• 成果类型: Article
• 署名作者: Malmendier, Ulrike; Szeidl, Adam
• 署名单位: University of California System; University of California Berkeley; Centre for Economic Policy Research - UK; National Bureau of Economic Research; Central European University
• 刊物名称: GAMES AND ECONOMIC BEHAVIOR
• ISSN/ISSBN: 0899-8256
• DOI: 10.1016/j.geb.2020.03.011
• 发表日期: 2020
• 页码: 105-129
• 关键词: Auctions; Fixed-price markets; Behavioral biases; Overbidding; amplification

摘要

We show that common market settings tend to amplify rather than reduce the effect of behavioral biases on prices and other market outcomes. We study two common market mechanisms, auctions and fixed-price markets, and establish three results. First, agents with upward-biased valuations have an amplified effect on market outcomes because markets over-select them relative to their population share. Intuitively, markets fish for fools. Second, auctions are often more efficient at fishing than fixed-price markets because a larger share of biased agents is required for prices to move in the fixed-price setting. Third, sellers respond to this difference and choose the less efficient but more profitable selling mechanism. They may also engage in inefficient complementary actions such as overproducing the good and over-recruiting buyers. We provide evidence from several markets, including eBay, housing markets, and financial markets. (C) 2020 The Authors. Published by Elsevier Inc.