Knowing me, imagining you: Projection and overbidding in auctions

• 成果类型: Article
• 署名作者: Breitmoser, Yves
• 署名单位: Humboldt University of Berlin
• 刊物名称: GAMES AND ECONOMIC BEHAVIOR
• ISSN/ISSBN: 0899-8256
• DOI: 10.1016/j.geb.2018.10.004
• 发表日期: 2019
• 页码: 423-447
• 关键词: Auctions; Overbidding; projection; risk aversion; Cursed equilibrium; Depth of reasoning

摘要

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-ofsample. The results reconcile bidding patterns across conditions and have implications for behavioral and empirical analyses as well as policy. (C) 2018 Elsevier Inc. All rights reserved.