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Nonlinear Behavior in Sealed Bid First Price Auctions

Chen, Kay-Yut and Plott, Charles R. (1998) Nonlinear Behavior in Sealed Bid First Price Auctions. Games and Economic Behavior, 25 (1). pp. 34-78. ISSN 0899-8256. https://resolver.caltech.edu/CaltechAUTHORS:20140224-162141381

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Abstract

Agents drew values from nonuniform distributions in first price sealed bid auctions. As a result, the theoretical bidding behavior is nonlinear. Three linear rules of thumb with increasing complexity are used as benchmarks to gauge the accuracy of the Constant Relative Risk Aversion Model (CRRAM). CRAMM is more accurate then the Markdown Model and the Simple Ad Hoc Model, but not as accurate as the Sophisticated Ad Hoc Model. The data support the relaxation of the rational expectations hypothesis and suggest that the predictive power of game theoretic models can be improved by improvements in the theory of belief formation.


Item Type:Article
Related URLs:
URLURL TypeDescription
http://dx.doi.org/10.1006/game.1997.0627 DOIArticle
http://www.sciencedirect.com/science/article/pii/S0899825697906278PublisherArticle
http://resolver.caltech.edu/CaltechAUTHORS:20170830-142425505Related ItemWorking Paper
Additional Information:© 1998 by Academic Press. Received March 16, 1994. The financial support of the National Science Foundation and the Caltech Laboratory for Experimental Economics and Political Science is gratefully acknowledged. We also thank John Ledyard, Mahmoud El-Gamal, John Kagel, Dan Levin, James Walker, and Robert Wilson for many helpful suggestions.
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NSFUNSPECIFIED
Caltech Laboratory for Experimental Economics and Political ScienceUNSPECIFIED
Issue or Number:1
Classification Code:JEL: C72; C91; C92; D44
Record Number:CaltechAUTHORS:20140224-162141381
Persistent URL:https://resolver.caltech.edu/CaltechAUTHORS:20140224-162141381
Official Citation:Kay-Yut Chen, Charles R Plott, Nonlinear Behavior in Sealed Bid First Price Auctions, Games and Economic Behavior, Volume 25, Issue 1, October 1998, Pages 34-78, ISSN 0899-8256, http://dx.doi.org/10.1006/game.1997.0627. (http://www.sciencedirect.com/science/article/pii/S0899825697906278)
Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:43962
Collection:CaltechAUTHORS
Deposited By: Susan Vite
Deposited On:25 Feb 2014 16:04
Last Modified:03 Oct 2019 06:13

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