Out-of equilibrium bids in auctions—Wrong expectations or wrong bids
Oliver Kirchkamp and J. Philipp Reiß
Abstract:
Bids in private value first-price auctions consistently deviate from risk neutral symmetric equilibrium bids. To understand these deviations we present a novel experimental procedure which allows to study the formation of expectations separately from the determination of a best reply against these expectations.We extensively test the internal validity of this setup. We find that off equilibrium behaviour are not due to wrong expectations but due to deviations from a best reply.
JEL-Classification: C92, D44
Keywords: Experiments, Auction, Expectations.
- An earlier version of the paper was circulated as a CRIEFF discussion paper 2006-09 under the title “Expectations in first-price auctions”.
- A version as of 18. March 2008 is available as Jena Economic Research Paper 2008-021.
- Here is a more recent version as of 5. December 2010. Here are Data and R files
- The paper has been published as