Level-k auctions:: Can a nonequilibrium model of strategic thinking explain the winner's curse and overbidding in private-value auctions?

• 成果类型: Article
• 署名作者: Crawford, Vincent P.; Iriberri, Nagore
• 署名单位: University of California System; University of California San Diego; Pompeu Fabra University
• 刊物名称: ECONOMETRICA
• ISSN/ISSBN: 0012-9682
• DOI: 10.1111/j.1468-0262.2007.00810.x
• 发表日期: 2007
• 页码: 1721-1770
• 关键词: common-value auctions; NORMAL-FORM GAMES; 1ST PRICE AUCTIONS; 1st-price auctions; public information; signaling games; guessing games; players models; BEHAVIOR; equilibrium

摘要

This paper proposes a structural nonequilibrium model of initial responses to incomplete-information games based on level-k thinking, which describes behavior in many experiments with complete-information games. We derive the model's implications in first- and second-price auctions with general information structures, compare them to equilibrium and Eyster and Rabin's (2005) cursed equilibrium, and evaluate the model's potential to explain nonequilibrium bidding in auction experiments. The level-k model generalizes many insights from equilibrium auction theory. It allows a unified explanation of the winner's curse in common-value auctions and overbidding in those independent-private-value auctions without the uniform value distributions used in most experiments.