A Comment on “Can Relaxation of Beliefs Rationalize the Winner's Curse?: An Experimental Study”

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JournalEconometrica
DateE-pub ahead of print - 18 Feb 2015
Issue number1
Volume83
Number of pages9
Pages (from-to)375-383
Original languageEnglish

Abstract

IVANOV,LEVIN, AND NIEDERLE claim that the results from their common-value second-price auction experiment casts a doubt on beliefs-based models as explanations for the winner’s curse. In this note, we first argue that ILN’s theoretical arguments are misleading (Section 2). Wethen show that beliefs-based models do not necessarily imply ILN’s predictions and are compatible with some observations (Sections 3 and 4). We also discuss other points (Section 5).

    Research areas

  • Beliefs-based models, Common-value auctions, Experiments

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