Can groups solve the problem of over-bidding in contests?

Sheremeta, RM; Zhang, J

Can groups solve the problem of over-bidding in contests?

Sheremeta, RM Zhang, J

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Publisher:: SPRINGER
Publication Type:: Journal Article
Citation:: Social Choice and Welfare, 2010, 35, (2), pp. 175-197
Issue Date:: 2010-07-01

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Field	Value	Language
dc.contributor.author	Sheremeta, RM
dc.contributor.author	Zhang, J https://orcid.org/0000-0003-3274-5245
dc.date.accessioned	2022-04-01T02:31:18Z
dc.date.available	2022-04-01T02:31:18Z
dc.date.issued	2010-07-01
dc.identifier.citation	Social Choice and Welfare, 2010, 35, (2), pp. 175-197
dc.identifier.issn	0176-1714
dc.identifier.issn	1432-217X
dc.identifier.uri	http://hdl.handle.net/10453/155850
dc.description.abstract	This study reports an experiment that examines whether groups can better comply with theoretical predictions than individuals in contests. Our experiment replicates previous findings that individual players significantly overbid relative to theoretical predictions, incurring substantial losses. There is high variance in individual bids and strong heterogeneity across individual players. The new findings of our experiment are that groups make 25% lower bids, their bids have lower variance, and group bids are less heterogeneous than individual bids. Therefore, groups receive significantly higher and more homogeneous payoffs than individuals. We elicit individual and group preferences toward risk using simple lotteries. The results indicate that groups make less risky decisions, which are possible explanations for lower bids in contests. Most importantly, we find that groups learn to make lower bids from communication and negotiation between group members. © 2009 Springer-Verlag.
dc.language	English
dc.publisher	SPRINGER
dc.relation.ispartof	Social Choice and Welfare
dc.relation.isbasedon	10.1007/s00355-009-0434-0
dc.rights	info:eu-repo/semantics/closedAccess
dc.subject	01 Mathematical Sciences, 14 Economics, 16 Studies in Human Society
dc.subject.classification	Economic Theory
dc.title	Can groups solve the problem of over-bidding in contests?
dc.type	Journal Article
utslib.citation.volume	35
utslib.for	01 Mathematical Sciences
utslib.for	14 Economics
utslib.for	16 Studies in Human Society
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	closed_access	*
dc.date.updated	2022-04-01T02:31:17Z
pubs.issue	2
pubs.publication-status	Published
pubs.volume	35
utslib.citation.issue	2

Abstract:

This study reports an experiment that examines whether groups can better comply with theoretical predictions than individuals in contests. Our experiment replicates previous findings that individual players significantly overbid relative to theoretical predictions, incurring substantial losses. There is high variance in individual bids and strong heterogeneity across individual players. The new findings of our experiment are that groups make 25% lower bids, their bids have lower variance, and group bids are less heterogeneous than individual bids. Therefore, groups receive significantly higher and more homogeneous payoffs than individuals. We elicit individual and group preferences toward risk using simple lotteries. The results indicate that groups make less risky decisions, which are possible explanations for lower bids in contests. Most importantly, we find that groups learn to make lower bids from communication and negotiation between group members. © 2009 Springer-Verlag.

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http://hdl.handle.net/10453/155850