IFREE-Sponsored Lecture Series at ESI

Diego Aycinena Abascal, Ph.D.
Dec. 9th, 2011

Auctions with Endogenous Participation

"My research involves using experimental economics to understand human behavior and the properties of various institutions. I use controlled laboratory experiments to understand strategic behavior in social, political and market settings, and the dynamics and performance of alternative market mechanisms. I also use field experiments to investigate how new policies and alternative arrangements can affect economic development through changes in behavior.

The research to be presented during the IFREE lecture series uses controlled laboratory experiments to better understand entry and participation in different auction formats. Auctions have been examined in the lab since the early days of the experimental economics. However, most of the literature has focused on individual bidding behavior and revenue comparisons across auction formats with a fixed and exogenous number of bidders who do not face entry/participation costs.

Here I try to extend the game to include the decision of whether to incur a cost in order to enter an auction and bid for a good, once you know how much you value the good being auctioned.

Specifically, my research is interested in the following questions: • Does revenue equivalence across auction mechanisms hold when bidders can choose whether to enter or not in an auction? • Do bidders exhibit different entry rates or entry decision rules for different auction mechanisms? • What explains individual decisions to enter and participate in an auction? • Are there factors at the individual level that explain participation and bidding behavior?

The pioneering experimental work on auctions of Vernon Smith and ESI-related scholars during the 1980’s and 1990’s was fundamental for the research on decentralized market mechanisms that arose later on. Similarly this line of research may start to shed some light as to how individuals decide to participate in impersonal allocation and exchange systems that seem promising for real world implementation –a research topic that is central to the interests of ESI and IFREE-funded research."

Bio:
Diego Aycinena is Assistant Professor at the Facultad de Ciencias Económicas and Director of the Centro Vernon Smith de Economía Experimental at Universidad Francisco Marroquín in Guatemala. His research relies on economic experiments to understand human behavior and the properties of various institutions. He uses laboratory experiments to test alternative market mechanisms in a controlled environment, and randomized field experiments to evaluate impact of alternative policies on development. He holds an MA and PhD in Economics from George Mason University and a BA from Universidad Francisco Marroquín.

Abstract:
TBA

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