Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/129585
Authors: 
Koch, Christian
Penczynski, Stefan P.
Year of Publication: 
2015
Series/Report no.: 
Working Paper Series, Department of Economics, University of Mannheim 15-03
Abstract: 
We investigate the relevance of conditional reasoning and belief formation for the occurrence of the winner's curse with the help of two experimental manipulations. First, we compare results from a very simple common-value auction game with results from a transformed version of this game that does not require any conditioning on future events. In human opponent settings, we observe significant differences in behavior across the two games. Second, we investigate subjects' behavior when they face naïve computerized opponents and after they have faced them. We find that both strong and weak assistance in belief formation changes subjects' play significantly in the auction game. Overall, the results suggest that the difficulty of conditioning on future events is at least as important in explaining frequent occurrences of the winner's curse as is the challenge to form beliefs.
Subjects: 
Auctions
Winner's curse
Conditional Reasoning
Beliefs
JEL: 
D44
D81
D82
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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