Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/171741
Authors: 
Fugger, Nicolas
Gillen, Philippe
Rasch, Alexander
Zeppenfeld, Christopher
Year of Publication: 
2017
Series/Report no.: 
ZEW Discussion Papers 17-057
Abstract: 
We examine bidding behavior in first-price sealed-bid and Dutch auctions, which are strategically equivalent under standard preferences. We investigate whether the empirical breakdown of this equivalence is due to (non-standard) preferences or due to the different complexity of the two formats (i.e., a different level of mathematical/ individual sophistication needed to derive the optimal bidding strategy). We first elicit measures of individual preferences and then manipulate the degree of complexity by offering various levels of decision support. Our results show that the equivalence of the two auction formats only breaks down in the absence of decision support. This indicates that the empirical breakdown is caused by differing complexity between the two formats rather than non-standard preferences.
Subjects: 
Auctions
Decision support system
Experiment
Loss aversion
Preferences
JEL: 
D44
D81
Document Type: 
Working Paper

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