Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/171741 
Year of Publication: 
2017
Series/Report no.: 
ZEW Discussion Papers No. 17-057
Publisher: 
Zentrum für Europäische Wirtschaftsforschung (ZEW), Mannheim
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
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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