An Experimental Analysis of Speculation and Strategic Demand Reduction in Multi-Object Auction
Marco Pagnozzi, Universita di Napoli Federico II, Department of Economics
Krista Jabs Saral, Webster University Geneva, Department of Business and Technology
This work begins with the observation that in the real world, people may sell items they purchase in auctions afterwards. This observation hints at the possibility that people (speculators) who have no value for an object itself might try to purchase one in an auction in order to subsequently sell it. To investigate this, the researchers propose to have human subjects participate in a series of multi-object auctions, followed by a resale market, in which ‘chatting’ is permitted, to establish a price for reselling the object. The experimental manipulation consists of varying the number of agents in the auction and the outside options available to speculators (i.e., agents who have no value for the object being auctions.) The researchers hope to use their findings to understand bidders’ strategies in the presence of speculators.