Separating Bayesian Updating from Non-Probabilistic Reasoning: An Experimental Investigation
American Economic Journal: Microeconomics
vol. 8,
no. 2, May 2016
(pp. 39-60)
Abstract
Through a series of decision tasks involving colored cards, we provide separate measures of Bayesian updating and non-probabilistic reasoning skills. We apply these measures to (and are the first to study) a common-value Dutch auction. This format is more salient than the strategically equivalent first-price auction and silent Dutch formats in hinting that one should condition one's estimate of the value on having the highest bid. Both Bayesian updating skills and non-probabilistic reasoning skills are shown to help subjects correct for the winner's curse, as does the saliency of the active-clock Dutch format. (JEL D12, D44, D83)Citation
Levin, Dan, James Peck, and Asen Ivanov. 2016. "Separating Bayesian Updating from Non-Probabilistic Reasoning: An Experimental Investigation." American Economic Journal: Microeconomics, 8 (2): 39-60. DOI: 10.1257/mic.20140008Additional Materials
JEL Classification
- D12 Consumer Economics: Empirical Analysis
- D44 Auctions
- D83 Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
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