Repeated Rounds with Price Feedback in Experimental Auction Valuation: An Adversarial Collaboration

American Journal of Agricultural Economics, 2012

Posted: 19 Jun 2014

See all articles by Jay R. Corrigan

Jay R. Corrigan

Kenyon College - Department of Economics

Andreas C. Drichoutis

University of Ioannina - Department of Economics; Agricultural University of Athens - Department of Agricultural Economics

Jayson L. Lusk

Oklahoma State University - Department of Agricultural Economics

Rodolfo M. Nayga

University of Arkansas - Dale Bumpers College of Agricultural, Food and Life Sciences; Norsk institutt for landbruksøkonomisk forskning (NILF)

Matthew C Rousu

Susquehanna University - Economics

Date Written: January 2012

Abstract

It is generally thought that market outcomes are improved with the provision of market information. As a result, the use of repeated rounds with price feedback has become standard practice in the applied experimental auction valuation literature.We conducted two experiments to determine how rationally subjects behave with and without price feedback in a second-price auction. Results from an auction for lotteries show that subjects exposed to price feedback are significantly more likely to commit preference reversals. However, this irrationality diminishes in later rounds. Results from an induced value auction indicate that price feedback caused greater deviations from the Nash equilibrium bidding strategy. Our results suggest that while bidding on the same item repeatedly improves auction outcomes (i.e., reduced preference reversals or bids closer to induced values), this improvement is not the result of price feedback.

Keywords: bid affiliation; posted prices; induced value experiment; preference reversals; lotteries

JEL Classification: D44

Suggested Citation

Corrigan, Jay R. and Drichoutis, Andreas C. and Lusk, Jayson L. and Nayga, Rodolfo M. and Rousu, Matthew C, Repeated Rounds with Price Feedback in Experimental Auction Valuation: An Adversarial Collaboration (January 2012). American Journal of Agricultural Economics, 2012, Available at SSRN: https://ssrn.com/abstract=2455840

Jay R. Corrigan (Contact Author)

Kenyon College - Department of Economics ( email )

Gambier, OH 43022
United States
740-427-5281 (Phone)
740-427-5276 (Fax)

Andreas C. Drichoutis

University of Ioannina - Department of Economics ( email )

45110 Ioannina
Greece

HOME PAGE: http://works.bepress.com/andreas_drichoutis/

Agricultural University of Athens - Department of Agricultural Economics ( email )

Iera Odos 75
Athens, Votanikos 11855
Greece

Jayson L. Lusk

Oklahoma State University - Department of Agricultural Economics ( email )

Stillwater, OK 74078-6026
United States
405-744-6161 (Phone)

Rodolfo M. Nayga

University of Arkansas - Dale Bumpers College of Agricultural, Food and Life Sciences ( email )

United States

Norsk institutt for landbruksøkonomisk forskning (NILF)

NO-0030 Oslo
Norway

Matthew C Rousu

Susquehanna University - Economics ( email )

Selinsgrove, PA 17870
United States
570 372-4186 (Phone)

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