Cluster detection in laboratory auction data: A model-based approach

Cluster detection in laboratory auction data: A model-based approach

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The benchmark risk-averse equilibrium model does not explain some of the outcomes obtained in experiments with first-price auctions.Nonetheless, the presence of non-linear bidding markbroyard.com and the wide dispersion of bids have received little attention in the literature.I focus on these issues and revisit previous laboratory evidence with the help of model-based clustering techniques.The rejection of equilibrium models is found to be mostly due to the significance of metabo 15-gauge finish nailer cordless non-linear bidding rules and the unexplained heterogeneity.

With the use of a mixture model, the observations are classified into four groups or clusters.Significant differences between individuals and clusters are found, but so is a persistent within individual variation, which leads us to conclude that subjects do not commit to one particular bidding strategy and alternate across several processes.