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Do practice rounds affect experimental auction results?

Author

Listed:
  • Corrigan, Jay R.
  • Rousu, Matthew C.
  • Depositario, Dinah Pura T.

Abstract

Researchers use practice rounds to familiarize participants with experimental auction mechanisms. We find a positive correlation between practice bids and bids submitted in later rounds. We consider three explanations for this correlation: a behavioral anchoring effect, a tendency for some auction participants to be more free-spending, and misconception of the experimental auction’s demand revealing qualities.

Suggested Citation

  • Corrigan, Jay R. & Rousu, Matthew C. & Depositario, Dinah Pura T., 2014. "Do practice rounds affect experimental auction results?," Economics Letters, Elsevier, vol. 123(1), pages 42-44.
    • Handle: RePEc:eee:ecolet:v:123:y:2014:i:1:p:42-44
    DOI: 10.1016/j.econlet.2014.01.014
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    References listed on IDEAS

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    1. Dan Ariely & George Loewenstein & Drazen Prelec, 2003. ""Coherent Arbitrariness": Stable Demand Curves Without Stable Preferences," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 118(1), pages 73-106.
    2. Andreas C. Drichoutis & Rodolfo M. Nayga & Panagiotis Lazaridis, 2011. "The Role of Training in Experimental Auctions," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 93(2), pages 521-527.
    3. Scott I. Rick & Cynthia E. Cryder & George Loewenstein, 2008. "Tightwads and Spendthrifts," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 34(6), pages 767-782, October.
    4. Thrasher, James F. & Rousu, Matthew C. & Hammond, David & Navarro, Ashley & Corrigan, Jay R., 2011. "Estimating the Impact of Food and Drug Administration Regulation of Cigarette Package Warning Labels and the Potential Added Impact of Plain Packaging: Evidence From Experimental Auctions Among Adult ," 2011 Annual Meeting, July 24-26, 2011, Pittsburgh, Pennsylvania 103169, Agricultural and Applied Economics Association.
    5. Corrigan, Jay R. & Rousu, Matthew C., 2008. "Testing Whether Field Auction Experiments Are Demand Revealing in Practice," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 33(2).
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    7. William Vickrey, 1961. "Counterspeculation, Auctions, And Competitive Sealed Tenders," Journal of Finance, American Finance Association, vol. 16(1), pages 8-37, March.
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    9. Thrasher, James F. & Rousu, Matthew C. & Hammond, David & Navarro, Ashley & Corrigan, Jay R., 2011. "Estimating the impact of pictorial health warnings and "plain" cigarette packaging: Evidence from experimental auctions among adult smokers in the United States," Health Policy, Elsevier, vol. 102(1), pages 41-48, September.
    10. Charles R. Plott & Kathryn Zeiler, 2005. "The Willingness to Pay–Willingness to Accept Gap, the "Endowment Effect," Subject Misconceptions, and Experimental Procedures for Eliciting Valuations," American Economic Review, American Economic Association, vol. 95(3), pages 530-545, June.
    11. Lusk, Jayson L. & Roosen, Jutta & Shogren, Jason (ed.), 2011. "The Oxford Handbook of the Economics of Food Consumption and Policy," OUP Catalogue, Oxford University Press, number 9780199569441.
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    Cited by:

    1. Teresa Briz & Andreas C. Drichoutis & Rodolfo M. Nayga, Jr, 2014. "Detecting false positives in experimental auctions: A case study of projection bias in food consumption," Working Papers 2014-4, Agricultural University of Athens, Department Of Agricultural Economics.
    2. Lichters, Marcel & Wackershauser, Verena & Han, Shixing & Vogt, Bodo, 2019. "On the applicability of the BDM mechanism in product evaluation," Journal of Retailing and Consumer Services, Elsevier, vol. 51(C), pages 1-7.

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    More about this item

    Keywords

    Experimental auctions; Practice rounds; Anchoring; Misconceptions; Spendthrift effect;
    All these keywords.

    JEL classification:

    • C9 - Mathematical and Quantitative Methods - - Design of Experiments
    • Q1 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture

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