1999-04-25Buch DOI: 10.18452/3285
Learning to Bid
An Experimental Study of Bid Function Adjustments in Auctions and Fair Division Games
We examine learning behavior in auctions and Fair division games with independent private values under two different price rules, first and second price. Participants face these four games repeatedly and submit complete bid functions rather than single bids. This allows us to examine whether learning is in‡uenced by the structural di¤erences between games. We …nd that within the time horizon which we investigate, learning does not drive toward risk neutral equilibrium bidding and characterize some features of observed learning: Bid functions are adjusted globally rather than locally, decision time matches the sequencing structure of game types, game rules do matter, and directional learning theory o¤ers a partial explanation for bid adjustments. The evidence supports a cognitive approach to learning.
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