Abstract

"Auctions With An Inexpert Bidder"

George Deltas and Richard Engelbrecht-Wiggans

First Author :

George Deltas
Economics
University of Illinois at Urbana-Champaign
1206 S. Sixth Street, M/C 706
Champaign, IL 61820
USA

deltas@uiuc.edu

http://www.staff.uiuc.edu/~deltas/

Second Author :

Richard Engelbrecht-Wiggans
Business Administration
University of Illinois at Urbana-Champaign
1206 S. Sixth Street, M/C 706
Champaign, IL 61820
USA

eplus17@uiuc.edu

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Abstract :

We consider an auction in which the behavior of one potential bidder departs mildly from full rationality. We show that the presence of such an inexpert bidder can be enough to discourage all of an infinitely large population of fully rational potential bidders from entering an auction. Furthermore, this departure from full rationality does not reduce the inexpert bidder’s payoff.

Manuscript Received : 2000

Manuscript Published : 2000

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