TY  - JOUR
AU  - Lee,Young Han
AU  - Malmendier,Ulrike
TI  - The Bidder's Curse
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 13699
PY  - 2007
Y2  - December 2007
UR  - http://www.nber.org/papers/w13699
L1  - http://www.nber.org/papers/w13699.pdf
N1  - Author contact info:
Young Han Lee
Highview Global Capital Management
E-Mail: younghan.lee@gmail.com

Ulrike Malmendier
Department of Economics
549 Evans Hall # 3880
University of California, Berkeley
Berkeley, CA 94720-3880
Tel: 510-642-5038
E-Mail: ulrike@econ.berkeley.edu
AB  - We employ a novel approach to identify overbidding in the field. We compare auction prices to fixed prices for the same item on the same webpage. In detailed board-game data, 42 percent of auctions exceed the simultaneous fixed price. The result replicates in a broad cross-section of auctions (48 percent). A small fraction of overbidders, 17 percent, suffices to generate the overbidding. The observed behavior is inconsistent with rational behavior, even allowing for uncertainty and switching costs, since also the expected auction price exceeds the fixed price. Limited attention to outside options is most consistent with our results. 
ER  -