Stochastic dominance and expected utility: survey and analysis
Management Science
Partial-Repeat-Bidding in the Name-Your-Own-Price Channel
Marketing Science
Models for Iterative Multiattribute Procurement Auctions
Management Science
Regret and Feedback Information in First-Price Sealed-Bid Auctions
Management Science
A Hidden Markov Model of Customer Relationship Dynamics
Marketing Science
Procurement Auctions for Differentiated Goods
Decision Analysis
Measuring Risk Aversion in a Name-Your-Own-Price Channel
Decision Analysis
The Sealed-Bid Abstraction in Online Auctions
Marketing Science
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We use laboratory experiments to examine the relative performance of the English auction (EA) and the first-price sealed-bid auction (FPA) when procuring a commodity. The mean and variance of prices are lower in the FPA than in the EA. Bids and prices in the EA agree with game-theoretic predictions, but they do not agree in the FPA. To resolve these deviations found in the FPA, we introduce a mixture model with three bidding rules: constant absolute markup, constant percentage markup, and strategic best response. A dynamic specification in which bidders can switch strategies as they gain experience is estimated as a hidden Markov model. Initially, about three quarters of the subjects are strategic bidders, but over time, the number of strategic bidders falls to below 65%. There is a corresponding growth in those who use the constant absolute markup rule.