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Market composition and experience in common-value auctions

Published online by Cambridge University Press:  14 March 2025

Johanna M.M. Goertz
Johanna M.M. Goertz*
Affiliation:
Department of Economics, University of Guelph, Guelph, ON N1G 2W1, Canada Center of Operations Research and Econometrics (CORE), Catholic University of Louvain, Louvain-la-Neuve, Belgium
*
[email protected]
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Abstract

This study investigates whether market composition affects individual bidding and the aggregate market in first-price sealed-bid common-value auctions. It compares all-inexperienced markets with only inexperienced bidders, all-experienced markets with only experienced bidders, and mixed markets with both types. On average, there is no market-composition effect for both experienced and inexperienced bidders. When controlling for gender, a market-composition effect appears for inexperienced subjects: Men bid more aggressively in mixed than in all-inexperienced markets, and women bid more aggressively in all-inexperienced markets. On the aggregate level, the all-inexperienced market is the most aggressive with highest winning bids; the all-experienced market is the least aggressive. The mixed market is in between: Both experienced and inexperienced win auctions in this market, but experienced bidders win less auctions than they should.

Keywords

Common-value auction experimentsMarket compositionExperience

JEL classification

D44: Auctions J16: Economics of Gender • Non-labor Discrimination
Type
Original Paper
Information
Experimental Economics , Volume 15 , Issue 1 , March 2012 , pp. 106 - 127
Copyright
Copyright © 2011 Economic Science Association

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Footnotes

Electronic supplementary material The online version of this article (doi:https://doi.org/10.1007/s10683-011-9291-7) contains supplementary material, which is available to authorized users.

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