Document Type
Article
Publication Date
2015
Abstract
Optimal bidding strategies in first-price and Dutch auctions are theoretically isomorphic but depend on bidder risk attitudes. However, laboratory experiments consistently find different behaviour between auction formats. This article explores whether the notion in psychology that financial and gambling risks are viewed differently can explain the discrepancy. Ultimately, the evidence does not support this hypothesis, but a bidder's propensity to gamble is associated with how much risk he takes in both auctions whereas his propensity to take financial risks is not. The results suggest that subjects may view themselves as gambling in laboratory auctions rather than making financial decisions.
Recommended Citation
Deck, Cary, Jungmin Lee, and Javier Reyes. "Are subjects making financial decisions in lab auctions or are they just gambling?" Applied Economics Letters 22.3 (2015): 228-232. doi: 10.1080/13504851.2014.934427
Peer Reviewed
1
Copyright
Taylor & Francis
Comments
This is an Accepted Manuscript of an article published in Applied Economics Letters in 2014. DOI: 10.1080/13504851.2014.934427.