Hostname: page-component-7b9c58cd5d-9klzr Total loading time: 0 Render date: 2025-03-16T09:17:52.563Z Has data issue: false hasContentIssue false
  • English
  • Français

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]
Get access Rights & Permissions [Opens in a new window]

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

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

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.

References

Armantier, O. (2004). Does observation influence learning? Games and Economic Behavior, 46(2), 221239.CrossRefGoogle Scholar
Capen, E., Clapp, R., & Campbell, W. (1971). Competitive bidding in high-risk situations. Journal of Petroleum Technology, 23, 641–653.CrossRefGoogle Scholar
Casari, M., Ham, J., & Kagel, J. (2007). Selection bias, demographic effects, and ability effects in common value auction experiments. The American Economic Review, 97(4), 1278–1304.CrossRefGoogle Scholar
Croson, R., & Gneezy, U. (2009). Gender differences in preferences. Journal of Economic Literature, 47(2), 448–474.CrossRefGoogle Scholar
Dufwenberg, M., Lindquist, T., & Moore, E. (2005). Bubbles and experience: An experiment. The American Economic Review, 95(5), 1731–1737.CrossRefGoogle Scholar
Garvin, S., & Kagel, J. (1994). Learning in common value auctions: Some initial observations. Journal of Economic Behavior & Organization, 25, 351–371.CrossRefGoogle Scholar
Kagel, J., & Levin, D. (1986). The winner's curse and public information in common value auctions. The American Economic Review, 76(5), 894–920.Google Scholar
Kagel, J., & Levin, D. (2002). Bidding in common value auctions: A survey of experimental research. In Kagel, J. & Levin, D. (Eds.), Common value auctions and the winner's curse (pp. 1–84). Princeton: Princeton University Press.CrossRefGoogle Scholar
Kagel, J., & Richard, J. (2001). Super-experienced bidders in first-price common value auctions: Rules of thumb, Nash equilibrium bidding, and the winner's curse. Review of Economics and Statistics, 83(3), 408–419.CrossRefGoogle Scholar
McAfee, R., & McMillan, J. (1987). Auctions and bidding. Journal of Economic Literature 25(2), 699738.Google Scholar
Slonim, R. (2005). Competing against experienced and inexperienced players. Experimental Economics, 8, 55–75.CrossRefGoogle Scholar
Slonim, R., & Leider, S. (2006). Does experience always pay? Welfare and distribution effects in games with heterogeneously experienced players. Unpublished manuscript.Google Scholar
Wilson, R. (1992). Strategic analysis of auctions. In Aumann, R. & Hart, S. (Eds.), The handbook of game theory with economic applications, Vol. I. Amsterdam: Elsevier.Google Scholar
Supplementary material: File

Goertz supplementary material

Online Appendix
Download Goertz supplementary material(File)
File 66.7 KB