How do auctioneers set ex ante and ex post reserve prices? An experimental study
Speaker:Prof.Jason Shachat£¨ Professor of Durham University£¬Co-Director of the Behavioural and Experimental Economics Northeast Cluster (BENC)£¬Associate Dean of research of the Durham University Business School£©
Time:16:00-17:30 March 16,2017(Thursday)
Abstract:We provide the direct experimental comparison of auctioneer behaviour in English auctions with a reserve price and the English auctions with renegotiation, two popular methods of procurement. In our experiment, the auctioneers in these two mechanisms demonstrate systematic biases relative theoretical predictions. We find a model of subjective conditional probability judgements explains the biases shown in the two mechanisms. Auctioneers choose reserve prices consistent with maximization of an expected utility model with transformed conditional probability of executing reserve prices, while they choose take-it-or-leave offers as though they distort Bayesian posterior probabilities of executing offers. To demonstrate the robustness of our model, especially relative to standard models and those of anticipated regret we then show in a subsequent experiment that the auctioneer's expected benefit is predicted well out of sample in an environment in which the distribution of seller's cost is right skewed.