Naturally occurring markets and exogenous laboratory experiments: A case study of the winner's curse
Abbreviated Journal Title
COMMON-VALUE AUCTIONS; ASYMMETRIC INFORMATION; INSIDER INFORMATION; PREFERENCE; EFFICIENCY; BIDDERS; Economics
We examine the relevance of experimental findings from laboratory settings that abstract from the field context of the task that theory purports to explain. Using common value auction theory as our guide, we identify naturally occurring settings in which one can test the theory. Experienced agents bidding in familiar roles do not fall prey to the winner's curse. Yet, experienced agents fall prey to the winner's curse when bidding in an unfamiliar role. We conclude that the theory predicts field behaviour well when one is able to identify naturally occurring field counterparts to the key theoretical conditions.
"Naturally occurring markets and exogenous laboratory experiments: A case study of the winner's curse" (2008). Faculty Bibliography 2000s. 7042.