ISSN:
1573-0476
Keywords:
auctions
;
bidding theory
;
experiments
Source:
Springer Online Journal Archives 1860-2000
Topics:
Economics
Notes:
Abstract First-price auction theory is extended to the case of heterogeneous bidders characterized byM-parameter log-concave utility functions. This model, and its specific two-parameter constant relative risk averse special case, is generally supported by the results of 47 experiments. The one-parameter special case that comprises most of the theoretical literature is not supported by the experiments. One anomaly for the two-parameter model is that too many of the subjects exhibit positive (or negative) intercepts in their linear estimated bid functions. Accordingly, we develop a specific three-parameter model, which introduces a utility of winning, and a threshold utility of surplus. The new model, tested directly by introducing lump-sum payments or charges for winning, is not falsified by the new experiments.
Type of Medium:
Electronic Resource
URL:
http://dx.doi.org/10.1007/BF00055565
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