Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/167941
Authors: 
Haruvy, Ernan
Popkowski Leszczyc, Peter T. L.
Year of Publication: 
2015
Citation: 
[Journal:] Games [ISSN:] 2073-4336 [Volume:] 6 [Year:] 2015 [Issue:] 3 [Pages:] 191-213
Abstract: 
We consider auctions with price externality where all bidders derive utility from the winning price, such as charity auctions. In addition to the benefit to the winning bidder, all bidders obtain a benefit that is increasing in the winning price. Theory makes two predictions in such settings: First, individual bids will be increasing in the multiplier on the winning price. Second, individual bids will not depend on the number of other bidders. Empirically, we find no evidence that increasing the multiplier increases individual bids in a systematic way, but we find that increasing the number of bidders does. An analysis of individual bidding functions reveals that bidders underweight the incentives to win and overweight the incentives to lose.
Subjects: 
auctions with price externality
bidder aggression
underbidding
experiments
Persistent Identifier of the first edition: 
Creative Commons License: 
http://creativecommons.org/licenses/by/4.0/
Document Type: 
Article
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