Do Practice Rounds Bias Experimental Auction Results?
Jay R. Corrigan, Associate Professor of Economics in the Department of Economics at Kenyon College, will present as part of the AEDE seminar series on February 26th in Room 105 of the Agricultural Administration Building (2120 Fyffe Road). His presentation will focus on "Do Practice Rounds Bias Experimental Auction Results?"
Abstract: Researchers routinely use practice rounds to familiarize experimental auction participants with an auction mechanism. However, looking at the results of two previous experimental auction studies, we find a strong positive correlation between bids submitted in practice rounds and bids submitted in the following real rounds of interest. We suggest three possible explanations for this correlation: a behavioral anchoring effect, a tendency for some auction participants to be more free-spending, and misconception of the experimental auction’s demand-revealing qualities. We then conduct a new auction to test which, if any, of these effects is responsible for the positive correlation between practice and real bids. We find no evidence of a spendthrift effect. We do find evidence of anchoring and misconception, but only in the first round of real auction bidding. To mitigate potential anchoring and misconception bias, we recommend pairing practice auction rounds with repeated real auction rounds without price feedback.
This event is open to the public and RSVPs are not required. If you have any questions, please contact us.
Photo credit: Kenyon College