Repeated rounds with price feedback in experimental auction valuation: An adversarial collaboration

Jay R. Corrigan, Andreas C. Drichoutis, Jayson L. Lusk, Rodolfo M. Nayga, Matthew C. Rousu

Research output: Contribution to journalArticle

33 Citations (Scopus)

Abstract

It is generally thought that market outcomes are improved with the provision of market information. As a result, the use of repeated rounds with price feedback has become standard practice in the applied experimental auction valuation literature. We conducted two experiments to determine how rationally subjects behave with and without price feedback in a second-price auction. Results from an auction for lotteries show that subjects exposed to price feedback are significantly more likely to commit preference reversals. However, this irrationality diminishes in later rounds. Results from an induced value auction indicate that price feedback caused greater deviations from the Nash equilibrium bidding strategy. Our results suggest that while bidding on the same item repeatedly improves auction outcomes (i.e., reduced preference reversals or bids closer to induced values), this improvement is not the result of price feedback.

Original languageEnglish
Pages (from-to)97-115
Number of pages19
JournalAmerican Journal of Agricultural Economics
Volume94
Issue number1
DOIs
Publication statusPublished - 2012 Jan

Keywords

  • bid affiliation
  • induced value experiment
  • lotteries
  • posted prices
  • preference reversals

ASJC Scopus subject areas

  • Agricultural and Biological Sciences (miscellaneous)
  • Economics and Econometrics

Fingerprint Dive into the research topics of 'Repeated rounds with price feedback in experimental auction valuation: An adversarial collaboration'. Together they form a unique fingerprint.

  • Cite this