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Bidding Behavior and Decision Costs in Field Experiments

Author

Listed:
  • John A. List

    (Department of Economics, University of Central Florida)

  • David Lucking-Reiley

    (Department of Economics, Vanderbilt University)

Abstract
Whether rationality of economic behavior increases with expected payoffs and decreases with the cognitive cost it takes to formulate an optimal strategy remains an open question. We explore these issues with field data, using individual bids from sealed-bid auctions in which we sold nearly $10,000 worth of sportscards. Our results indicate that stakes do indeed matter, as high-priced ($70) cards produced more of the theoretically predicted strategic behavior than did lower-priced ($3) cards. We find additional evidence consistent with the importance of cognitive costs, as subjects more experienced with sportscard auctions exhibited a greater tendency to behave strategically than did less experienced bidders.

Suggested Citation

  • John A. List & David Lucking-Reiley, 2000. "Bidding Behavior and Decision Costs in Field Experiments," Vanderbilt University Department of Economics Working Papers 0006, Vanderbilt University Department of Economics.
    • Handle: RePEc:van:wpaper:0006
    as

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    References listed on IDEAS

    as
    1. Smith, Vernon L & Walker, James M, 1993. "Monetary Rewards and Decision Cost in Experimental Economics," Economic Inquiry, Western Economic Association International, vol. 31(2), pages 245-261, April.
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    More about this item

    Keywords

    Cognitive cost; field experiments; multi-unit auctions;
    All these keywords.

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments

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