No abstract

We use laboratory experiments to examine the relative performance of the English auction (EA) and the first-price sealed-bid auction (FPA) when procuring a commodity. The mean and variance of prices are lower in the FPA than in the EA. Bids and prices in the EA agree with game-theoretic predictions, but they do not agree in the FPA. To resolve these deviations found in the FPA, we introduce a mixture model with three bidding rules: constant absolute markup, constant percentage markup, and strategic best response. A dynamic specification in which bidders can switch strategies as they gain experience is estimated as a hidden Markov model. Initially, about three quarters of the subjects are strategic bidders, but over time, the number of strategic bidders falls to below 65%. There is a corresponding growth in those who use the constant absolute markup rule.

No abstract

We examine how the outbreak of the COVID-19 virus in the Hubei province of China impacted pro-social behavior and attitudes toward risk and uncertainty. The study repeatedly applies a panel of financially incentivized individual and strategic decision tasks via the WeChat social media platform to a population of preregistered Wuhan University students. We find that the initial outbreak coupled with the lock-down of Wuhan City led to an uptick in altruism, trust, and ambiguity aversion and a downtick in risk aversion. Over the remaining samples, we observed that all measurements return to baseline levels except for risk aversion.

We experimentally investigate the evolution play in an infinitely repeated voluntary contribution mechanism (VCM). We find that in infinitely repeated VCM games: (i) average contributions in the first round are similar to those of finitely repeated VCM games; (ii) most groups have a non‐monotonic trend of contribution with repetition; and (iii) contributions remain at the same level after an unexpected restart. The data provides strong support for heterogeneous subjects, which may explain the non‐monotonic trend of average contributions. This trend is caused by one category of subjects who expect others to contribute in period t as they did in period t − 1.