Auction Design with Behavioural Bidders (2022)
Abstract
Recent research highlights a discrepancy between the predictions of the Economic Theory of Auctions and the features of auctions commonly observed in practice. This may be explained by the fact that the traditional economic analysis of auctions posits that bidders are fully rational. Yet, evidence from psychology and behavioural economics documents systemic departures from rational decision-making. Under such departures, auctions may cause an inefficient allocation of resources. This project aims to incorporate behavioural elements from psychology into the economic analysis of auctions in order to expand its realism, and to gain new insights for the design of relevant, real-world auctions such as real-estate auctions or internet auctions.
