Sophisticated Bidders in Beauty-Contest Auctions

• 成果类型: Article
• 署名作者: Galavotti, Stefano; Moretti, Luigi; Valbonesi, Paola
• 署名单位: University of Padua; HSE University (National Research University Higher School of Economics)
• 刊物名称: AMERICAN ECONOMIC JOURNAL-MICROECONOMICS
• ISSN/ISSBN: 1945-7669
• DOI: 10.1257/mic.20150240
• 发表日期: 2018
• 页码: 1-26
• 关键词: Public procurement; Cognitive hierarchy; players models; performance; INFORMATION; winners; ability; price; games; bids

摘要

We study bidding behavior by firms in beauty-contest auctions, i.e., auctions in which the winning bid is the one that gets closest to some function (average) of all submitted bids. Using a dataset on public procurement beauty-contest auctions, we show that firms' observed bidding behavior departs from equilibrium and can be predicted by a sophistication index, which captures the firms' capacity of bidding close to optimality in the past. We show that our empirical evidence is consistent with a Cognitive Hierarchy model of bidders' behavior. We also investigate whether and how firms learn to bid strategically through experience.