Learning to set the reserve price optimally in laboratory first price auctions

Article Type

Research Article

Publication Title

Games

Abstract

We analyze choices of sellers, each setting a reserve price in a laboratory first price auction with automated equilibrium bidding. Subjects are allowed to gain experience for a fixed period of time prior to making a single payoff-relevant choice. Behavior of more experienced sellers was consistent with benchmark theory: average reserve price for these sellers was independent of the number of bidders and equaled the predicted level. Less experienced sellers however deviated from the theoretical benchmark: on average, they tended to shade reserve price below the predicted level and positively relate it to the number of bidders.

DOI

10.3390/g9040079

Publication Date

12-1-2018

Comments

All Open Access, Gold, Green

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