Posted Prices and Bid Affiliation: Evidence from Experimental Auctions |
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Authors: | Jay R. Corrigan Matthew C. Rousu |
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Affiliation: | Jay Corrigan is assistant professor, Department of Economics, Kenyon College, and was a visiting collaborator at the Center for Agricultural and Rural Development while conducting part of this research;. Matthew Rousu is assistant professor, Department of Economics, Susquehanna University. |
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Abstract: | In most experimental auctions, researchers ask participants to bid on the same item in multiple potentially binding rounds, posting the price submitted by the top bidder or bidders after each of those rounds. If bids submitted in later rounds are affiliated with posted prices from earlier rounds, this practice could result in biased value estimates. In this article, we discuss the results of an experiment designed explicitly to test whether posted prices affect bidding behavior. We find that for familiar items, high posted prices lead to increased bids in subsequent rounds. Our results have implications for researchers conducting experimental auctions. |
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Keywords: | affiliation experimental auctions posted prices |
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