Title

Posted Prices and Bid Affiliation: Evidence from Experimental Actions

Document Type

Article

Publication Date

11-1-2006

Abstract

In most experimental auctions, researchers ask participants to bid on the same item in multiple potentially binding rounds, posting the price submitted by the top bidder or bidders after each of those rounds. If bids submitted in later rounds are affiliated with posted prices from earlier rounds, this practice could result in biased value estimates. In this article, we discuss the results of an experiment designed explicitly to test whether posted prices affect bidding behavior. We find that for familiar items, high posted prices lead to increased bids in subsequent rounds. Our results have implications for researchers conducting experimental auctions.

Journal

American Journal of Agricultural Economics

Volume

88

Issue

4

First Page

1078

Last Page

1090