Irrationality in English auctions

Ricardo Gonçalves*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

5 Citations (Scopus)

Abstract

This paper explores the effects of a particular form of irrational behaviour by participating bidders in a common value English auction. We allow bidders to update their expected valuation of the good as the current price increases, assuming that their opponents always play the symmetric Nash equilibrium. When only one bidder adopts this type of behaviour, it is ambiguous whether the final auction price is higher or lower than at the symmetric equilibrium. However, when both bidders behave irrationally, the final auction price is never lower than the symmetric equilibrium provided bidders "match" their strategies.

Original languageEnglish
Pages (from-to)180-192
Number of pages13
JournalJournal of Economic Behavior and Organization
Volume67
Issue number1
DOIs
Publication statusPublished - Jul 2008

Keywords

  • Asymmetric equilibrium
  • English auctions
  • Irrationality

Fingerprint

Dive into the research topics of 'Irrationality in English auctions'. Together they form a unique fingerprint.

Cite this