Loss aversion and competition in Vickrey auctions: Money ain't no good

Rosato, A; Tymula, AA

Loss aversion and competition in Vickrey auctions: Money ain't no good

Rosato, A

Tymula, AA

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Publication Type:: Journal Article
Citation:: Games and Economic Behavior, 2019, 115 pp. 188 - 208
Issue Date:: 2019-05-01

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Field	Value	Language
dc.contributor.author	Rosato, A https://orcid.org/0000-0003-1789-0225	en_US
dc.contributor.author	Tymula, AA	en_US
dc.date.available	2021-05-18T19:00:42Z
dc.date.issued	2019-05-01	en_US
dc.identifier.citation	Games and Economic Behavior, 2019, 115 pp. 188 - 208	en_US
dc.identifier.issn	0899-8256	en_US
dc.identifier.uri	http://hdl.handle.net/10453/138748
dc.description.abstract	© 2019 Elsevier Inc. A key prediction of expectations-based reference-dependent preferences and loss aversion in second-price auctions with private values is that the number of bidders should affect bids in auctions for real objects but not in auctions with induced monetary values. In order to test this distinctive comparative statics prediction, we develop an experiment where subjects bid in multiple auctions for real objects as well as auctions with induced values, each time facing a different number of rivals. Our results are broadly consistent with expectations-based reference-dependent preferences and loss aversion. We find that in real-object auctions bids decline with the intensity of competition whereas in induced-value auctions, instead, bids do not vary with the intensity of competition. Our results suggest that bidders may behave differently in real-object auctions than in induced-value ones, casting some doubt on the extent to which findings from induced-value laboratory experiments can be transferred to the field.	en_US
dc.relation.ispartof	Games and Economic Behavior	en_US
dc.relation.isbasedon	10.1016/j.geb.2019.02.014	en_US
dc.rights	info:eu-repo/semantics/embargoedAccess
dc.subject.classification	Economic Theory	en_US
dc.title	Loss aversion and competition in Vickrey auctions: Money ain't no good	en_US
dc.type	Journal Article
utslib.citation.volume	115	en_US
utslib.for	1401 Economic Theory	en_US
utslib.for	1402 Applied Economics	en_US
pubs.embargo.period	Not known	en_US
pubs.organisational-group	/University of Technology Sydney
pubs.organisational-group	/University of Technology Sydney/Faculty of Business
pubs.organisational-group	/University of Technology Sydney/Faculty of Business/Economics Discipline
utslib.copyright.status	open_access	*
pubs.publication-status	Published	en_US
pubs.volume	115	en_US

Abstract:

© 2019 Elsevier Inc. A key prediction of expectations-based reference-dependent preferences and loss aversion in second-price auctions with private values is that the number of bidders should affect bids in auctions for real objects but not in auctions with induced monetary values. In order to test this distinctive comparative statics prediction, we develop an experiment where subjects bid in multiple auctions for real objects as well as auctions with induced values, each time facing a different number of rivals. Our results are broadly consistent with expectations-based reference-dependent preferences and loss aversion. We find that in real-object auctions bids decline with the intensity of competition whereas in induced-value auctions, instead, bids do not vary with the intensity of competition. Our results suggest that bidders may behave differently in real-object auctions than in induced-value ones, casting some doubt on the extent to which findings from induced-value laboratory experiments can be transferred to the field.

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http://hdl.handle.net/10453/138748