Experiments on Auction Valuation and Endogenous Entry
27 Pages Posted: 28 Mar 2005
Date Written: October 2004
We present results of several experiments that deal with endogenous entry in auctions and auction valuation. One observation that is constant across all of the experiments we report is that laboratory subjects have a difficult time evaluating potential gains from auctions. Even after they are given some experience with particular auctions, the uncertainty inherent in the auctions (the probability of winning as well as the potential gains from winning) makes it difficult for subjects to compare different auction mechanisms. This highlights the need for new experimental procedures to be used for testing theories that involve endogenous auction entry in the laboratory.
Keywords: Auctions, entry, experiments
JEL Classification: C72, D83, D44, C91
Suggested Citation: Suggested Citation