“Overbidding” with respect to risk-neutral Nash predictions in first-price auction experiments has been consistently reported in the literature. One possible explanation for overbidding is that participants in these experiments may try to avoid regret induced by the knowledge of winning bids in case they do not win these auctions. Such considerations may drive bidders to bid aggressively in first-price auctions. We test whether differences in how auction outcomes are revealed produces systematic differences in bidding. In our design, where individuals bid against pre-programmed computers, differences in revelation of winning bids, does not produce significant treatment differences. Our results are in contrast to previous experiments, which report systematic treatment differences based on whether winning bids are revealed or not.
- Anticipated regret
- Laboratory experiments