Preferences and decision support in competitive bidding


Fugger, Nicolas ; Gillen, Philippe ; Rasch, Alexander ; Zeppenfeld, Christopher


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URL: https://ub-madoc.bib.uni-mannheim.de/43752
URN: urn:nbn:de:bsz:180-madoc-437527
Document Type: Working paper
Year of publication: 2017
The title of a journal, publication series: ZEW Discussion Papers
Volume: 17-057
Place of publication: Mannheim
Publication language: English
Institution: Sonstige Einrichtungen > ZEW - Leibniz-Zentrum für Europäische Wirtschaftsforschung
MADOC publication series: Veröffentlichungen des ZEW (Leibniz-Zentrum für Europäische Wirtschaftsforschung) > ZEW Discussion Papers
Subject: 330 Economics
Classification: JEL: D44 , D81,
Keywords (English): Auctions , decision support system , experiment , loss aversion , preferences
Abstract: We examine bidding behavior in first-price sealed-bid and Dutch auctions, which are strategically equivalent under standard preferences. We investigate whether the empirical breakdown of this equivalence is due to (non-standard) preferences or due to the different complexity of the two formats (i.e., a different level of mathematical/individual sophistication needed to derive the optimal bidding strategy). We first elicit measures of individual preferences and then manipulate the degree of complexity by offering various levels of decision support. Our results show that the equivalence of the two auction formats only breaks down in the absence of decision support. This indicates that the empirical breakdown is caused by differing complexity between the two formats rather than non-standard preferences.

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Fugger, Nicolas ; Gillen, Philippe ; Rasch, Alexander ; Zeppenfeld, Christopher (2017) Preferences and decision support in competitive bidding. Open Access ZEW Discussion Papers Mannheim 17-057 [Working paper]
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