The psychology of common value auctions
The psychology of common value auctions
One of the most interesting but unresolved phenomena in auction behaviour is the winner's curse — the strong tendency of participants to bid more than rational agent theory prescribes, often at a significant loss. To address this, an approach is proposed that uses neuroscience as a means to determine the nature of the mechanisms at play as people learn to bid. The chapter is organized as follows. Section 3.1 introduces. Section 3.2 defines the winner's curse formally and outlines the (optimal) Nash equilibrium bidding strategy. Section 3.3 includes experiments demonstrating that social context is a critical factor underlying the winner's curse, above and beyond the influence of other explanations, such as risk aversion. Section 3.4 begins building a complete model of bidding behaviour by accounting for learning in the task with a reinforcement learning model. The validity of this learning model is established with functional brain imaging described in Section 3.5 while Section 3.6 concludes.
Keywords: auction behaviour, winner's curse, neuroscience, bidding behaviour, learning model, brain imaging
Oxford Scholarship Online requires a subscription or purchase to access the full text of books within the service. Public users can however freely search the site and view the abstracts and keywords for each book and chapter.
Please, subscribe or login to access full text content.
If you think you should have access to this title, please contact your librarian.
To troubleshoot, please check our FAQs , and if you can't find the answer there, please contact us .
