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Mental Processes and Strategic Equilibration: An fMRI Study of Selling Strategies in Second Price Auctions

Grether, David M. and Plott, Charles R. and Rowe, Daniel B. and Sereno, Martin I. and Allman, John M. (2004) Mental Processes and Strategic Equilibration: An fMRI Study of Selling Strategies in Second Price Auctions. Social Science Working Paper, 1189R. California Institute of Technology , Pasadena, CA. (Unpublished) https://resolver.caltech.edu/CaltechAUTHORS:20170731-150528277

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Abstract

This study is the first to attempt to isolate a relationship between cognitive activity and equilibration to a Nash Equilibrium. Subjects, while undergoing fMRI scans of brain activity, participated in second price auctions against a single competitor following predetermined strategy that was unknown to the subject. For this auction there is a unique strategy that will maximize the subjects' earnings, which is also a Nash equilibrium of the associated game theoretic model of the auction. As is the case with all games, the bidding strategies of subjects participating in second price auctions most often do not reflect the equilibrium bidding strategy at first but with experience, typically exhibit a process of equilibration, or convergence toward the equilibrium. This research is focused on the process of convergence.


Item Type:Report or Paper (Working Paper)
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URLURL TypeDescription
http://resolver.caltech.edu/CaltechAUTHORS:20140128-133234344Related ItemPublished Version
Additional Information:Revised version. Original dated to February 2004. The research support of the Caltech Laboratory for Experimental Economics and the National Science Foundation are gratefully acknowledged. Published as Grether, D.M., Plott, C.R., Rowe, D.B., Sereno, M., & Allman, J.M. (2007). Mental processes and strategic equilibration: An fMRI study of selling strategies in second price auctions. Experimental Economics, 10(2), 105-122.
Group:Social Science Working Papers
Funders:
Funding AgencyGrant Number
Caltech Laboratory for Experimental EconomicsUNSPECIFIED
NSFUNSPECIFIED
Subject Keywords:auctions, strategy, imaging
Series Name:Social Science Working Paper
Issue or Number:1189R
Classification Code:JEL classi�cation numbers: C91, D83, C23
Record Number:CaltechAUTHORS:20170731-150528277
Persistent URL:https://resolver.caltech.edu/CaltechAUTHORS:20170731-150528277
Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:79624
Collection:CaltechAUTHORS
Deposited By: Jacquelyn Bussone
Deposited On:01 Aug 2017 23:01
Last Modified:03 Oct 2019 18:22

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