On Tuesday, February 26, 2013, Kenyon College’s Jay R. Corrigan, Associate Professor of Economics, presented his research "Do Practice Rounds Bias Experimental Auction Results?" as part of the Spring 2013 AEDE Seminar Series.
Corrigan’s research focuses on whether or not practice auction rounds influence the final results in experimental auctions. As Corrigan notes in his research, this field is of importance as economists often use experimental auctions to estimate the value of new products and product traits, to study consumer behavior and to understand the impact of information. To date, no previous study has examined the relationship between the results garnered in practice rounds to those in real auction rounds.
In his research, which was conducted with Matthew C. Rousu from Susquehanna University and Dinah Pura T. Depositario from the University of the Philippines Los Banos, Corrigan and team examined results from two auction experiments where participants bid on homegrown-value goods in both practice and real rounds.
In both experiments the researchers found strong positive correlations between practice and real bids for unrelated products. Based on an analysis of the results, Corrigan and the research team hypothesize that there are three possible explanations for this correlation: anchoring, misconception, and what they call the spendthrift effect.
To test these theories the researchers then conducted an experiment designed to test for the presence of the three effects. In their analysis of the results they found no evidence of a spendthrift effect in the practice round influencing the real round of auction results; however, they did find that anchoring and misconception influenced bidding in the first real round, but there was no evidence of anchoring or misconception effects in later rounds.
By offering these contributions to the field, Corrigan and team hope to offer recommendations for researchers on how to better conduct auction experiments. As the researchers note, the results show that researchers should begin recording practice round bids, which is not currently a common practice in the field. Additionally, they recommend using repeated real auction rounds without price feedback to protect against misconception and anchoring effects.
Click here to read "Do Practice Rounds Bias Experimental Auction Results?" in full.
February 28, 2013