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John A List, David Lucking-Reiley

Cited by*: 40 Downloads*: 5

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John A List, David Lucking-Reiley

Cited by*: 12 Downloads*: 9

Whether rationality of economic behavior increases with expected payoffs and decreases with the cognitive cost it takes to formulate an optimal strategy remains an open question. We explore these issues with field data, using individual bids from sealed-bid auctions in which we sold nearly $10,000 worth of sportscards. Our results indicate that stakes do indeed matter, as high-priced ($70) cards produced more of the theoretically predicted strategic behavior than did lower-priced ($3) cards. We find additional evidence consistent with the importance of cognitive costs, as subjects more experienced with sportscard auctions exhibited a greater tendency to behave strategically than did less experienced bidders.

David Lucking-Reiley

Cited by*: 76 Downloads*: 16

William Vickrey's predicted equivalences between first-price sealed-bid and Dutch auctions, and between second-price sealed-bid and English auctions, are tested using field experiments that auctioned off collectible trading cards over the Internet. The results indicate that the Dutch auction produces 30-percent higher revenues than the first-price auction format, a violation of the theoretical prediction and a reversal of previous laboratory results, and that the English and second-price formats produce roughly equivalent revenues.

David Lucking-Reiley

Cited by*: 1 Downloads*: 11

I present experimental evidence on the effects of minimum bids in first-price, sealed-bid auctions. The auction experiments manipulated the minimum bids in a preexisting market on the Internet for collectible trading cards from the game Magic: the Gathering. I examine a number of outcomes, including the number of participating bidders, the probability of sale, the levels of individual bids, and the auctioneer's revenues. The benchmark theoretical model is one with symmetric, risk-neutral bidders with independent private values. The results verify a number of the predictions concerning equilibrium bidding. Many bidders behave strategically, anticipating the effects of the reserve price on others' bids.

Rama Katkar, David Lucking-Reiley

Cited by*: 7 Downloads*: 13

Sellers in eBay auctions have the opportunity to choose both a public minimum bid amount and a secret reserve price. We ask, empirically, whether the seller is made better or worse off by setting a secret reserve above a low minimum bid, versus the option of making the reserve public by using it as the minimum bid level. In a field experiment, we auction 50 matched pairs of Pokemon cards on eBay, half with secret reserves and half with equivalently high public minimum bids. We find that secret reserve prices make us worse off as sellers, by reducing the probability of the auction resulting in a sale, deterring serious bidders from entering the auction, and lowering the expected transaction price of the auction. We also present evidence that some sellers choose to use secret reserve prices for reasons other than increasing their expected auction prices.

John A List, David Lucking-Reiley

Cited by*: 161 Downloads*: 25

We test two recent theories on the subject of charitable fundraising in capital campaigns. Andreoni (1998) predicts that publicly announced seed contributions can increase the total amount of charitable giving in a capital campaign. Bagnoli and Lipman (1989) predict that another technique for increasing contributions is a promise to refund donors' money in case the campaign threshold is not reached. Using a field experiment in a capital campaign for the Center for Environmental Policy Analysis at the University of Central Florida, we present evidence on both of these predictions. Data from direct mail solicitations sent to 3000 Central Floridian residents confirm the basic comparative-static predictions of both theories: total contributions increase with the amount of seed money, and with the use of a refund policy. A change in seed money from 10% to 67% of the campaign goal resulted in nearly a sixfold increase in contributions, while imposing a refund increased contributions by a more modest 20%. Seed money has a statistically significant effect on both the proportion of people choosing to donate and on the average gift size of those who donate, while refunds have a statistically significant effect only on the average gift size. These results have clear implications for practitioners in the design of fundraising campaigns.

John A List, David Lucking-Reiley

Cited by*: 29 Downloads*: 1

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