Explaining deviations from equilibrium in auctions with avoidable fixed costs

• 成果类型: Article
• 署名作者: Elmaghraby, Wedad J.; Larson, Nathan
• 署名单位: University of Virginia; University System of Maryland; University of Maryland College Park
• 刊物名称: GAMES AND ECONOMIC BEHAVIOR
• ISSN/ISSBN: 0899-8256
• DOI: 10.1016/j.geb.2012.06.002
• 发表日期: 2012
• 页码: 131-159
• 关键词: Auctions; Experimental; procurement; synergies; Asymmetric bidders; learning; Optimization errors

摘要

Bidders often face avoidable fixed costs or other synergies that can make bidding decisions complex and risky, and market outcomes volatile. If bidders deviate from risk neutral best responses, either due to faulty optimization or a preference to avoid volatility, then equilibrium predictions can perform poorly. In this paper, we confront laboratory bidders with three auction formats that make bidding difficult in different ways. We find that measures of 'difficulty' provide a consistent explanation of deviations from best response bidding across the three formats. (C) 2012 Elsevier Inc. All rights reserved.