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Going...going...wrong: a test of the level-k (and cognitive hierarchy) models of bidding behaviour

Abstract:

In this paper, we design and implement an experiment aimed at testing the level-k model of auctions. We begin by asking which (simple) environments can best dis entangle the level-k model from its leading rival, Bayes-Nash equilibrium. We find two environments that are particularly suited to this purpose: an all-pay auction with uniformly distributed values, and a first-price auction with the possibility of cancelled bids. We then implement both of these environments in a virtual laboratory i...

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Publication status:
Published

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Institution:
University of Oxford
Division:
SSD
Department:
Economics
Role:
Author
Publisher:
University of Oxford
Series:
Department of Economics Discussion Paper Series
Article number:
959
Publication date:
2022-01-05
ISSN:
1471-0498
Paper number:
959
Language:
English
Keywords:
Pubs id:
1231041
Local pid:
pubs:1231041
Deposit date:
2022-01-10

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