The initial endowment effect in experimental auctions revisited: Further evidence

Lanier Nalley; Darren Hudson; Gregory Parkhurst

doi:10.1080/1350485042000307080

The initial endowment effect in experimental auctions revisited: Further evidence

Lanier Nalley, Darren Hudson, Gregory Parkhurst

Agricultural and Applied Economics

Research output: Contribution to journal › Article

7 Scopus citations

Abstract

This analysis employs a uniform 4th price sealed-bid auction to test the impact of endowment heterogeneity on participant bids. A mechanism to legitimize the wealth of participants consistent with prior research on endowments is employed. Second, unlike some previous literature, a mechanism to endogenously induce endowment heterogeneity is employed. Results from a Tobit analysis of participant bids indicate that endowment heterogeneity has no significant impact on bidding behaviour. Therefore, it is concluded that when wealth is legitimized within an experiment, bidding behaviour is more likely rational leading to more robust experimental results.

Original language	English
Pages (from-to)	59-63
Number of pages	5
Journal	Applied Economics Letters
Volume	12
Issue number	1
DOIs	https://doi.org/10.1080/1350485042000307080
State	Published - Jan 15 2005

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