Nonlinear Behavior in Sealed Bid First Price Auctions

Authors: Chen K-Y.1; Plott C.R.2

Source: Games and Economic Behavior, Volume 25, Number 1, October 1998 , pp. 34-78(45)

Publisher: Academic Press

Key:
Free Content - Free Content
New Content - New Content
Subscribed Content - Subscribed Content
Free Trial Content - Free Trial Content

Abstract:

Agents drew values from nonuniform distributions in first price sealed bid auctions. As a result, the theoretical bidding behavior is nonlinear. Three linear rules of thumb with increasing complexity are used as benchmarks to gauge the accuracy of the Constant Relative Risk Aversion Model (CRRAM). CRRAM is more accurate than the Markdown Model and the Simple Ad Hoc Model, but not as accurate as the Sophisticated Ad Hoc Model. The data support the relaxation of the rational expectations hypothesis and suggest that the predictive power of game theoretic models can be improved by improvements in the theory of belief formation. Journal of Economic Literature Classification Numbers: C72; C91; C92; D44. Copyright 1998 Academic Press.

Language: English

Document Type: Research article

Affiliations: 1: Hewlett-Packard Laboratories, Hewlett-Packard Company, Palo Alto, California, 94304-1126 2: Division of the Humanities and Social Sciences, California Institute of Technology, Pasadena, California, 91125

The full text electronic article is available for purchase. You will be able to download the full text electronic article after payment.

$54.38 plus tax      Refund Policy

 

OR

Back to top

Key:
Free Content - Free Content
New Content - New Content
Subscribed Content - Subscribed Content
Free Trial Content - Free Trial Content
Share this item with others: These icons link to social bookmarking sites where readers can share and discover new web pages.
Page Help Click here for Page Help
Shopping cart
Tools
Sign in






Need to register?
Sign up here
Text size: A | A | A | A