Environmental and Resource Economics

, Volume 31, Issue 1, pp 35–45

Is the Experimental Auction a Dynamic Market?



Experimental auctions are generally thought of as static markets. This paper presents the results of an experimental auction designed to test whether participants’ perceptions regarding the relative difficulty of delaying or reversing a transaction outside the experimental market systematically affect their willingness-to-pay bids. The results show that auction participants’ perceptions significantly impact their bids in a manner that is consistent with real option theory. These results suggest that economists must be careful to consider the existence of outside markets when designing experimental auctions.


commitment cost dynamic markets experimental auctions real option theory 


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Copyright information

© Springer 2005

Authors and Affiliations

  1. 1.Department of EconomicsKenyon CollegeGambierUSA

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