Going, going, gone: competitive decision-making in Dutch auctions

Cognitive Research

Mark Steyvers¹  Marc T. P. Adam²  Rachel Mullard³  Murray Bennett³  Scott Brown³  Ami Eidels³ 

[1] Department of Cognitive Sciences, University of California, Irvine;School of Electrical Engineering and Computing, University of Newcastle;School of Psychology, The University of Newcastle;

关键词: Dutch auction;    Group decision making;    Competitive;    Prospect theory;   

DOI  :  10.1186/s41235-020-00259-w

来源: DOAJ

【 摘 要 】

Abstract In a Dutch auction, an item is offered for sale at a set maximum price. The price is then gradually lowered over a fixed interval of time until a bid is made, securing the item for the bidder at the current price. Bidders must trade-off between certainty and price: bid early to secure the item and you pay a premium; bid later at a lower price but risk losing to another bidder. These properties of Dutch auctions provide new opportunities to study competitive decision-making in a group setting. We developed a novel computerised Dutch auction platform and conducted a set of experiments manipulating volatility (fixed vs varied number of items for sale) and price reduction interval rate (step-rate). Triplets of participants ( $$N=66$$ N = 66 ) competed with hypothetical funds against each other. We report null effects of step-rate and volatility on bidding behaviour. We developed a novel adaptation of prospect theory to account for group bidding behaviour by balancing certainty and subjective expected utility. We show the model is sensitive to variation in auction starting price and can predict the associated changes in group bid prices that were observed in our data.

【 授权许可】

Unknown