A non-game-theoretic approach to bidding in first-price and all-pay auctions

Time：Sep 18th (Tuesday) 16:45-18:15 PM

Location：Jinhe 874

Speaker：Dr. WU Hang

Introduction：

Dr. Wu is an Associate Professor at the School of Management, Harbin Institute of Technology. He obtained his Ph.D. from University of Adelaide in 2014. His research interest is in Behavioral and Experimental Economics. Dr. Wu has published a number of papers on prestigious journals including Science, Pacific Economic Review, and Journal of Economic Dynamics and Control.

Abstract：

We propose a novel approach to the modelling of behavior in first-price and all-pay auctions that builds on the presumption that bidders do not engage in game-theoretic reasoning. Our models, AsP (for Aspired-Payoff) and nIBE (for naïve Impulse Balance Equilibrium), exploit the information available to bidders and assume risk neutrality, no best-responding behavior and no profit-maximization. Their parameter-free variants entail either overbidding or Nash equilibrium bidding. We assess their explanatory power with the data of first-price and all-pay auction experiments and find that overall, our models outperform Nash in explaining the data on either format. Assuming probability misperception further improves their goodness-of-fit. Assuming impulse weighting in nIBE may lead to overbidding and organizes the effect of end-of-round information feedback on behavior in repeated auctions.

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