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Auction methods of valuation and the endowment effect

In: Handbook of Research Methods in Behavioural Economics

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  • Fang-Fang Tang

Abstract

The difference between people’s valuation of gains and losses (the endowment effect) has been widely observed in both single trials and repeated trials. Even for very long sequences of repeated Vickrey auction experiments (60 rounds) which we will review, such tests of the impact of several auction rules on valuations indicate that the disparity has sharply increased between rounds 1 and 9 but then stabilised after the ninth round. This new observation calls for a deeper discussion of its possible reasons that do not exist in the literature yet. We will also review a pilot set of experiments, using groups of five, ten and 20 subjects respectively for a fourth Vickrey auction rule (bidding/selling three identical objects), for the examination of ‘competition intensity’ as we coin the term – the ratio between the number of the auction participants and the number of the auctioned items.

Suggested Citation

  • Fang-Fang Tang, 2023. "Auction methods of valuation and the endowment effect," Chapters, in: Morris Altman (ed.), Handbook of Research Methods in Behavioural Economics, chapter 22, pages 377-399, Edward Elgar Publishing.
    • Handle: RePEc:elg:eechap:19806_22
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    Keywords

    Economics and Finance; Research Methods;

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