My Intermediate Micro Course: Efficient Auctions « Cheap Talk

For the comon-value setting I do a classroom experiment where I auction an unknown amount of cash.  The amount up for sale is equal to the average of the numbers on 10 cards that I have handed out to 10 volunteers.  Each volunteer sees only his own card and then bids.  If the experiment works (it doesnt always work) then we should see the winner’s curse in action:  the winner will typically be the person holding the highest number, and bidding something close to that number will lose money as the average is certainly lower.

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