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Anchoring effects in repeated auctions of homogeneous objects: Evidence from Macao

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  • Chui, Peter M.W.
  • Fong, Lawrence Hoc Nang
  • Ren, Jinjuan
  • Tam, Lewis H.K.

Abstract

We provide evidence of anchoring effects from the sealed-bid auctions of vehicle plates in Macao. Vehicle plates are homogeneous in use value and differ only in character and numerical sequences. Nevertheless, vehicle plates with particular numerical sequences are consistently and repeatedly auctioned off in Macao, thus providing unique panel data that facilitate the identification of an anchoring effect. We adopt a hedonic pricing model to estimate the rational price of vehicle plates. We find that when bidding on a numerical sequence, bidders anchor on the winning bid in the previous auction, which result in continuation of the winning bid price.

Suggested Citation

  • Chui, Peter M.W. & Fong, Lawrence Hoc Nang & Ren, Jinjuan & Tam, Lewis H.K., 2022. "Anchoring effects in repeated auctions of homogeneous objects: Evidence from Macao," Journal of Economic Psychology, Elsevier, vol. 90(C).
    • Handle: RePEc:eee:joepsy:v:90:y:2022:i:c:s0167487022000319
    DOI: 10.1016/j.joep.2022.102514
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    1. Yigit Oezcelik & Michel Tolksdorf, 2023. "Non-numerical and social anchoring in consumer-generated ratings," Working Papers 202319, University of Liverpool, Department of Economics.

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    More about this item

    Keywords

    Anchoring; Auction; Hedonic pricing; Sealed bid; Vehicle plates;
    All these keywords.

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets

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