Projection of Private Values in Auctions

• 成果类型: Article
• 署名作者: Gagnon-Bartsch, Tristan; Pagnozzi, Marco; Rosato, Antonio
• 署名单位: Harvard University; Harvard University; University of Naples Federico II; University of Technology Sydney
• 刊物名称: AMERICAN ECONOMIC REVIEW
• ISSN/ISSBN: 0002-8282
• DOI: 10.1257/aer.20200988
• 发表日期: 2021
• 页码: 3256-3298
• 关键词: egocentric bias; winners curse; INFORMATION; prices; preferences; others; buyers; COMPETITION; 1ST-PRICE; BEHAVIOR

摘要

We explore how taste projection-the tendency to overestimate how similar others' tastes are to one's own affects bidding in auctions. In first-price auctions with private values, taste projection leads bidders to exaggerate the intensity of competition and, consequently, to overbid-irrespective of whether values are independent, affiliated, or (a)symmetric. Moreover, the optimal reserve price is lower than the rational benchmark, and decreasing in the extent of projection and the number of bidders. With an uncertain common-value component, projecting bidders draw distorted inferences about others' information. This misinference is stronger in second-price and English auctions, reducing their allocative efficiency compared to first-price auctions.