Behavior in second-price auctions by highly experienced eBay buyers and sellers
- 595 Downloads
We report on sealed-bid second-price auctions that we conducted on the Internet using subjects with substantial prior experience: they were highly experienced participants in eBay auctions. Unlike the novice bidders in previous (laboratory) experiments, the experienced bidders exhibited no greater tendency to overbid than to underbid. However, even subjects with substantial prior experience tended not to bid their values, suggesting that the non-optimal bidding of novice subjects is robust to substantial experience in non-experimental auctions. We found that auction revenue was not significantly different from the expected revenue the auction would generate if bidders bid their values. Auction efficiency, as measured by the percentage of surplus captured, was substantially lower in our SPAs than in previous laboratory experiments.
KeywordsExperience eBay Second-price Sealed bid Auction
JEL ClassificationC12 C93 D44 D82
Unable to display preview. Download preview PDF.
- Cooper, D., & Kagel, J. (2006). The role of context and team play in cross-game learning (Mimeo). Google Scholar
- Cox, J., Roberson, B., & Smith, V. (1982). Theory and behavior of single object auctions. In V. L. Smith (Ed.), Research in experimental economics (Vol. 2, pp. 1–43). Greenwich: JAI Press. Google Scholar
- Garratt, R., Walker, M., & Wooders, J. (2004). Behavior in second-price auctions by highly experienced eBay buyers and sellers (UCSB Working Paper 04-04). Google Scholar
- Harstad, R. (2000). Dominant strategy adoption, efficiency and bidders’ experience with pricing rules. Experimental Economics, 3, 261–280. Google Scholar
- Kirchkamp, O., & Reiss, P. (2006). Another explanation for overbidding and another bias for underbidding in first price auctions (CRIEFF Discussion Paper 0606). Google Scholar