Bramsen, Jens-Martin (2008): Learning to bid, but not to quit – Experience and Internet auctions.
Download (2324Kb) | Preview
A classic argument in economics is that experience in the market place will eliminate mistakes and cognitive biases. Internet auctions are a popular market were some bidders gather extensive experience. In a unique data set from a Scandinavian auction site I question if and what bidders learn. At face value experienced bidders do adapt better bidding strategies. However, the so-called pseudo-endowment eﬀect does not disappear. Regardless of their experience, bidders will be inclined to increase their willingness to pay as a response to having had “ownership” (the leading bid) before being outbid. Thus, this data can conﬁrm that feedback, and especially negative feedback, seems to be a critical component in learning.
|Item Type:||MPRA Paper|
|Original Title:||Learning to bid, but not to quit – Experience and Internet auctions|
|Keywords:||Experience, Learning, Internet auctions, Reference-Dependent Preferences, Endowment Eﬀect, Bidding behavior, eBay.|
|Subjects:||D - Microeconomics > D1 - Household Behavior and Family Economics > D12 - Consumer Economics: Empirical Analysis
D - Microeconomics > D4 - Market Structure and Pricing > D44 - Auctions
D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D83 - Search; Learning; Information and Knowledge; Communication; Belief
|Depositing User:||Jens-Martin Bramsen|
|Date Deposited:||24. Apr 2009 00:42|
|Last Modified:||13. Feb 2013 08:42|
Ariely, D., Heyman, J. and Orhun, Y.: 2004, Auction fever: The eﬀect of opponents and the quasi-endowment on product valuations, Journal of Interactive Marketing 18(4).
Ariely, D. and Simonsen, I.: 2003, Buying, bidding, playing or competing? value assessment and decision dynamics in online auctions, Journal of Consumer Psychology 13, 113–123.
Bajari, P. and Hortacsu, A.: 2003, The winner’s curse, reserve prices, and endogenous entry: empirical insights from ebay auctions, RAND Journal of Economics 34(2), 329–355.
Bajari, P. and Hortacsu, A.: 2004, Economic insights from internet auctions, Journal of Economic Litterature XLII, 457–486.
Borle, S., Boatwright, P. and Kadane, J. B.: 2006, The timing of bid placement and extent of multiple bidding: An emperical investigation using ebay online auctions, Statisctical Science 21, 194–205.
Braga, J., Humphrey, S. J. and Starmer, C.: 2006, Market experience elim- inates some anomalities - and creates new ones, CeDEx Discussion Paper (19).
Bramsen, J.-M.: 2008a, Bid early and get it cheap - timing eﬀects in inter- net auctions, Working Paper, Institute of Food and Resource Economics, University of Copenhagen .
Bramsen, J.-M.: 2008b, Rebidding? a pseudo-endowment eﬀect on internet auctions?, Working Paper, Institute of Food and Resource Economics, University of Copenhagen .
Garratt, R. and Wooders, J.: 2004, Eﬃciency in second-price auctions: A new look at old data, Working Paper .
Haigh, M. S. and List, J. A.: 2005, Do professional traders exhibit my- opic loss aversion? an experimental analysis, The Journal of Finance 60, 523534.
Kagel, J. H. and Levin, D.: 1993, Independent private value auctions: Bid- der behaviour in ﬁrst-, second- and third-price auctions with varying num- bers of bidders, Economic Journal 103, 868–879.
Lee, H. and Malmendier, U.: 2006, The bidder’s curse, Working Paper, Stanford University.
List, J. A.: 2003, Does market experience eliminate market anomalies?, Quarterly Journal of Economics 118(1), 41–71.
List, J. A.: 2004, Neoclassical theory versus prospect theory: Evidence from the market place, Econometrica 72, 615–625.
Livingston, J. A.: 2008, The behavior of inexperienced bidders in internet auctions, Economic Inquiry .
Loomes, G., Starmer, C. and Sugden, R.: 2003, Do anomalities disappear in repeated markets?, The Economic Journal 113, 153–166.
Noy, A. and Rafaeli, S.: 2005, Simulating internet auctions online: eﬀects of learning and experience, International Journal of Simulation & Process Model ling 1, 161–170.
Ockenfels, A. and Roth, A. E.: 2002, The timing of bids in internet auc- tions market design, bidder behavior, and artiﬁcial agents, AI Magazine 23(3), 79–87.
Ockenfels, A. and Roth, A. E.: 2006, Late and multiple bidding in second price internet auctions: Theory and evidence concerning diﬀerent rules for ending an auction, Games and Economic Behavior 55(2), 297–320.
Prelec, D.: 1990, A ”pseudo-endowment” eﬀect and its implications for some recent nonexpected utility models, Journal of Risk and Uncertainty 3, 247–259.
Strahilevitz, M. and Loewenstein, G.: 1998, The eﬀect of ownership history on the valuation of ob jects, The Journal of Consumer Research 25, 276– 289.
Wang, X. and Hu, Y.: 2007, Learning by losing: An emperical study of bidding eﬀort evolvement in auctions, Working Paper .
Wilcox, R. T.: 2000, Experts and amateurs: The role of experience in in- ternet auctions, Marketing Letters 11, 363–374.
Wolf, J., Arkes, H. R. and Muhanna, W. A.: 2006, Do auction bidders ’really’ want to win the item, or do they simply want to win?, SSRN Working Paper.