Naturally occurring markets and exogenous laboratory experiments: A case study of the winner's curse

    Authors

    G. W. Harrison;J. A. List

    Comments

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    Abbreviated Journal Title

    Econ. J.

    Keywords

    COMMON-VALUE AUCTIONS; ASYMMETRIC INFORMATION; INSIDER INFORMATION; PREFERENCE; EFFICIENCY; BIDDERS; Economics

    Abstract

    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.

    Journal Title

    Economic Journal

    Volume

    118

    Issue/Number

    528

    Publication Date

    1-1-2008

    Document Type

    Article

    Language

    English

    First Page

    822

    Last Page

    843

    WOS Identifier

    WOS:000254272900013

    ISSN

    0013-0133

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