Universität zu Köln

Gretschko, Vitali and Rajko, Alexander (2015). Excess information acquisition in auctions. Exp. Econ., 18 (3). S. 335 - 356. DORDRECHT: SPRINGER. ISSN 1573-6938

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Abstract

The acquisition of information is an important feature in most auctions where one's exact private valuation is unknown ex-ante. We conducted the first experiment in testing a risk-neutral expected surplus maximization model with this feature. Varying the auction format and the cost of information acquisition we found bidders in most cases acquired too much information. Moreover, bidders who remained uninformed placed bids significantly below the optimal bid. The general prediction concerning revenue and efficiency remains valid, as a higher information cost was associated with lower revenues and efficiency rates. We explore different ex-post explanations for the observed behavior and show that regret avoidance can explain the data while risk aversion and ambiguity aversion cannot.

Item Type:	Journal Article
Creators:	Creators Email ORCID ORCID Put Code Gretschko, Vitali UNSPECIFIED UNSPECIFIED UNSPECIFIED Rajko, Alexander UNSPECIFIED UNSPECIFIED UNSPECIFIED
URN:	urn:nbn:de:hbz:38-394929
DOI:	10.1007/s10683-014-9406-z
Journal or Publication Title:	Exp. Econ.
Volume:	18
Number:	3
Page Range:	S. 335 - 356
Date:	2015
Publisher:	SPRINGER
Place of Publication:	DORDRECHT
ISSN:	1573-6938
Language:	English
Faculty:	Unspecified
Divisions:	Unspecified
Subjects:	no entry
Uncontrolled Keywords:	Keywords Language SEALED-BID AUCTIONS; PRICE AUCTIONS; REGRET; 2ND-PRICE; 1ST-PRICE; BEHAVIOR Multiple languages Economics Multiple languages
URI:	http://kups.ub.uni-koeln.de/id/eprint/39492