Researchers use practice rounds to familiarize participants with experimental auction mechanisms. We find a positive correlation between practice bids and bids submitted in later rounds. We consider three explanations for this correlation: a behavioral anchoring effect, a tendency for some...

Basic economic theory predicts that a consumer’s willingness to pay for a good is affected by the availability of complements and substitutes. In an auction setting, this theory implies that the presence of complements would increase bid prices for a good, while the presence of substitutes...

We report the results of an experiment designed to test whether initial endowments affect value estimates elicited from experimental auctions. Comparing bids for one unit of a good, two units of a good, and a second unit of a good when endowed with the first unit, we find that willingness to pay...

In most experimental auctions, researchers ask participants to bid on the same item in multiple potentially binding rounds, posting the price submitted by the top bidder or bidders after each of those rounds. If bids submitted in later rounds are affiliated with posted prices from earlier...

Recent evidence suggests that participants’ misunderstanding of experimental auction mechanisms can systematically bias auction results. We present a simple technique for testing whether field auction participants fully understand the demand-revealing nature of the auction mechanism and, by...

Firms spend billions of dollars annually on new product and label designs in order to attract and retain customers. The issue of labeling is also important to government agencies and nonprofit labeling organizations. For example, the U.S. Food and Drug Administration has an organizational body...

Policymakers are considering including stricter standards in international trade agreements. Using auctions to assess preferences, we find that the median consumer places no premium on fair trade foods produced under more stringent labor and environmental standards. This indicates that current...