Auction Mechanisms And The Measurement Of Wtp And Wta

We evaluate the impact of three auction mechanisms – the Becker-DeGroot-Marschak mechanism, the second-price auction, and the random nth-price auction – in the measurement of willingness to pay (WTP) and willingness to accept (WTA) measures of value. Our results show that initial bidding in trial 1 in each auction does not contradict the endowment effect; but that, if it is the endowment effect that governs people’s initial bidding behavior, it can be eliminated with repetitions of a second-price or random nth-price auction; and if the thesis is that the effect should persist across auctions and across trials is right, our results suggest that there is no fundamental endowment effect.