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Irrationality in English Auctions
[journal article]
Abstract
This paper explores the effects of a particular form of irrational behaviour by participating bidders in a common value English auction. We allow bidders to update their expected valuation of the good as the current price increases, assuming that their opponents always play the symmetric Nash equili... view more
This paper explores the effects of a particular form of irrational behaviour by participating bidders in a common value English auction. We allow bidders to update their expected valuation of the good as the current price increases, assuming that their opponents always play the symmetric Nash equilibrium. When only one bidder adopts this type of behaviour, it is ambiguous whether the final auction price is higher or lower than at the symmetric equilibrium. However, when both bidders behave irrationally, the final auction price is never lower than the symmetric equilibrium provided bidders “match” their strategies.... view less
Classification
General Psychology
Document language
English
Publication Year
2008
Page/Pages
p. 180-192
Journal
Journal of Economic Behavior & Organization, 67 (2008) 1
DOI
https://doi.org/10.1016/j.jebo.2006.10.002
Status
Postprint; peer reviewed
Licence
PEER Licence Agreement (applicable only to documents from PEER project)