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http://hdl.handle.net/10419/37164
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| Title: | | An Experimental Test of Precautionary Bidding  |
| Authors: | | Pahlke, Julius Kocher, Martin Trautmann, Stefan T. |
| Issue Date: | | 2010 |
| Series/Report no.: | | Beiträge zur Jahrestagung des Vereins für Socialpolitik 2010: Ökonomie der Familie - Session: Auctions with Asymmetric Information A13-V2 |
| Abstract: | | Auctions often involve goods exhibiting a common knowledge ex-post risk that is independent of buyers' private values or their signals regarding common value components. Esö and White (2004) showed theoretically that ex-post risk leads to precautionary bidding for DARA bidders: Agents reduce their bids by more than their appropriate risk premium. Testing precautionary bidding with data from the field seems almost impossible. We conduct experimental first-price auctions that allow us to directly identify the precautionary premium and find clear evidence for precautionary bidding. Results are robust if we control for potentially confounding decision biases. |
| Subjects: | | auctions precautionary bidding experiment |
| JEL: | | C91 D44 D81 |
| Document Type: | | Conference Paper |
| Appears in Collections: | | Jahrestagung des Vereins für Socialpolitik 2010 (Kiel): Ökonomie der Familie
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