Template-Type: ReDIF-Paper 1.0

Author-Name: Johannes Moser
Author-X-Name-First: Johannes
Author-X-Name-Last: Moser

Title: Hypothetical thinking and the winner's curse: An experimental investigation

	
Abstract: There is evidence that bidders fall prey to the winner's curse because they fail to extract information from hypothetical events - like winning an auction. This paper investigates experimentally whether bidders in a common value auction perform better when the requirements for this cognitive issue - also denoted by contingent reasoning - are relaxed, leaving all other parameters unchanged. The overall pattern of the data suggests that the problem of irrational over- and underbidding can be weakened by giving the subjects ex ante feedback about their bid, but unlike related studies I also find negative effects of additional information.
Length: 40 pages
Creation-Date:  2017-11
File-URL: http://www.bgpe.de/texte/DP/176_Moser.pdf
File-Format: Application/pdf
File-Function: First version, 2017
Number: 176
Classification-JEL: D03, D44, D82, D83, C91
Keywords: Hypothetical thinking, cursed equilibrium, winner's curse
Handle: RePEc:bav:wpaper:176_Moser