We are grateful for helpful comments to Elmar Wolfstetter and participants at the GEW Jahrestagung 2005 and the Economic Science Association Meeting 2006. Financial support from the Deutsche Forschungsgemeinschaft, SFB Transregio 15, (“Governance and Efficiency as Economic Systems”), is gratefully acknowledged. Complete sets of instructions for the experiments in this paper are available upon request to the authors.
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ROBUSTNESS OF BIDDER PREFERENCES AMONG AUCTION INSTITUTIONS
Article first published online: 14 JAN 2008
DOI: 10.1111/j.1465-7295.2007.00111.x
© 2008 Western Economic Association International
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How to Cite
IVANOVA-STENZEL, R. and SALMON, T. C. (2008), ROBUSTNESS OF BIDDER PREFERENCES AMONG AUCTION INSTITUTIONS. Economic Inquiry, 46: 355–368. doi: 10.1111/j.1465-7295.2007.00111.x
Publication History
- Issue published online: 2 SEP 2008
- Article first published online: 14 JAN 2008
- Online Early publication January 14, 2008
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In previous work, we found that bidders strongly prefer the ascending to the first-price sealed-bid auction on a ceteris paribus basis, but perhaps surprisingly, they are not willing to pay up to an entry price for the ascending auction that would equalize the profits. Risk aversion was proposed as an explanation. In this study, we examine two alternative explanations for the observed behavior: loss aversion and aversion to the dynamic bidding process. We find that neither alternative explanation can account for bidders’ auction choice behavior, leaving risk aversion as the only unfalsified hypothesis. (JEL C91, D44)