Deltas, George; Engelbrecht-Wiggans, Richard - In: Management Science 51 (2005) 3, pp. 328-338
This paper presents an equilibrium explanation for the persistence of naive bidding. Specifically, we consider a common value auction in which a "naive" bidder (who ignores the winner's curse) competes against a fully rational bidder. We show that the naive bidder earns higher equilibrium...