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Speaker information

Dan Levin, University of Ohio

We investigate experimentally a possible Winner's Curse in a generalized environment with common values. In our design, participants are given examples in which parameters lead to prize values (using an undisclosed and typically complex formula). They are then asked to estimate the prize value with a final set of parameter values and then bid for this prize value in a second-price auction. Unlike previous studies, two main ingredients 'responsible' for the creation of the winner's curse are absent: 1) there is no presumption of common knowledge of a joint distribution, and 2) there are no private signals, just a public one. Thus, it is difficult to discuss or compute a BNE, or to measure individual departures from it. It is unclear what ought to be the behavioral norm, how to compute it and/or measure individual departures from it. It is also difficult, if not impossible, to talk about a posterior distribution conditional on winning as we don't induce any priors.

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