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Essays on economic behavior, focusing and auctions

Ingebretsen Carlson, Jim LU (2018)
Abstract
This thesis contributes to research on experimental and behavioral economics as well as auction theory. It consists of five papers.

The first paper, Differences Attract: An Experimental Study of Focusing in Economic Choice, studies whether individuals' decisions are affected by focus effects. The focus effect suggests that individuals focus more on an attribute that has a larger difference among the available consumption options. This leads in turn to the observation that individuals overweigh such attributes and are thus more likely to choose a consumption option if the choice set displays a large difference in its strongest attribute. This experimental study finds that individuals do display a focusing bias. This bias is also... (More)
This thesis contributes to research on experimental and behavioral economics as well as auction theory. It consists of five papers.

The first paper, Differences Attract: An Experimental Study of Focusing in Economic Choice, studies whether individuals' decisions are affected by focus effects. The focus effect suggests that individuals focus more on an attribute that has a larger difference among the available consumption options. This leads in turn to the observation that individuals overweigh such attributes and are thus more likely to choose a consumption option if the choice set displays a large difference in its strongest attribute. This experimental study finds that individuals do display a focusing bias. This bias is also contrasted by the decoy (attraction) effect in the study. The results suggest that the focusing effect is stronger than the decoy effect.

The second paper, Visual Attraction: Modes of Presentation and Focusing in Economic Choice, examines whether the focus effect found in the first paper is affected by the visual interface. Specifically, we present options either by bar graphs or in tables. We find a strong focus effect when options are presented as bar graphs, but no such effect when the options are presented in a table.

The third paper, Shill Bidding and Information in Sequential Auctions: A Laboratory Study, studies the effects of shill bidding, which occurs when sellers bid on their own item in order to increase its price. We also study the effect of providing shill bidding sellers with the bidding history from previous auctions. Using two sequential auctions in each round of the experiment, the study finds that shill bidding affects bidders' behavior and outcomes. However, the amount of information provided to the shill bidding sellers has no important effects.

The fourth paper, An Auction with Approximated Bidder Preferences - When an Auction has to be Quick, provides a solution to the problem of accommodating bidders' possible non-quasi-linear preferences in a quick combinatorial auction setting. The solution is based on a method for approximating bidders' preferences. It is shown that an equilibrium always exists under a certain condition and a process for finding the minimum approximated Walrasian price vector is provided.

The fifth paper, A Method for Finding the Maximal Set in Excess Demand, provides a computationally improved process for finding an equilibrium in the partnership formation problem. The method builds on finding the set of agents who are in maximal excess demand, then raises the payoffs of these. The process is shown to always stop at the minimum Walrasian price vector. (Less)
Please use this url to cite or link to this publication:
author
supervisor
opponent
  • Professor Miettinen, Topi, Hanken School of Economics
organization
publishing date
type
Thesis
publication status
published
subject
keywords
Attention, focusing, experiments, auctions, shill bidding, approximated preferences, partnership formation
pages
249 pages
defense location
Holger Crafoord Centre EC3:210
defense date
2018-05-22 14:15:00
ISBN
978-91-7753-603-1
978-91-7753-602-4
language
English
LU publication?
yes
id
d789e324-d075-45f7-8992-f171115ad78c
date added to LUP
2018-04-09 11:45:06
date last changed
2018-11-21 21:39:08
@phdthesis{d789e324-d075-45f7-8992-f171115ad78c,
  abstract     = {This thesis contributes to research on experimental and behavioral economics as well as auction theory. It consists of five papers.<br/><br/>The first paper, Differences Attract: An Experimental Study of Focusing in Economic Choice, studies whether individuals' decisions are affected by focus effects. The focus effect suggests that individuals focus more on an attribute that has a larger difference among the available consumption options. This leads in turn to the observation that individuals overweigh such attributes and are thus more likely to choose a consumption option if the choice set displays a large difference in its strongest attribute. This experimental study finds that individuals do display a focusing bias. This bias is also contrasted by the decoy (attraction) effect in the study. The results suggest that the focusing effect is stronger than the decoy effect.<br/><br/>The second paper, Visual Attraction: Modes of Presentation and Focusing in Economic Choice, examines whether the focus effect found in the first paper is affected by the visual interface. Specifically, we present options either by bar graphs or in tables. We find a strong focus effect when options are presented as bar graphs, but no such effect when the options are presented in a table. <br/><br/>The third paper, Shill Bidding and Information in Sequential Auctions: A Laboratory Study, studies the effects of shill bidding, which occurs when sellers bid on their own item in order to increase its price. We also study the effect of providing shill bidding sellers with the bidding history from previous auctions. Using two sequential auctions in each round of the experiment, the study finds that shill bidding affects bidders' behavior and outcomes. However, the amount of information provided to the shill bidding sellers has no important effects.  <br/><br/>The fourth paper, An Auction with Approximated Bidder Preferences - When an Auction has to be Quick, provides a solution to the problem of accommodating bidders' possible non-quasi-linear preferences in a quick combinatorial auction setting. The solution is based on a method for approximating bidders' preferences. It is shown that an equilibrium always exists under a certain condition and a process for finding the minimum approximated Walrasian price vector is provided.<br/><br/>The fifth paper, A Method for Finding the Maximal Set in Excess Demand, provides a computationally improved process for finding an equilibrium in the partnership formation problem. The method builds on finding the set of agents who are in maximal excess demand, then raises the payoffs of these. The process is shown to always stop at the minimum Walrasian price vector.},
  author       = {Ingebretsen Carlson, Jim},
  isbn         = {978-91-7753-603-1},
  language     = {eng},
  month        = {04},
  school       = {Lund University},
  title        = {Essays on economic behavior, focusing and auctions},
  year         = {2018},
}