Reserve prices as reference points – Evidence from auctions for football players at Hattrick.org

S.T. Trautmann, C. Traxler

Research output: Contribution to journalArticleScientificpeer-review

Abstract

We study the impact of sellers’ reserve prices on transfer prices in online auctions of virtual football players at Hattrick.org. We introduce an empirical model that distinguishes between two separate effects from public reserve prices: (1) a mechanical effect, which is driven by the design of the English auction and (2) a psychological reference-dependence effect through reserve prices serving as reference points. The psychological effect has recently been introduced in behavioral models of situations where agents are uncertain about their own willingness-to-pay, while the mechanical effect is well captured by standard auction theory. Controlling for censoring when players are not sold, both effects are observed. Once we account for the potential endogeneity of reserve prices, however, we do not find evidence for reference dependence in Hattrick auctions.
Original languageEnglish
Pages (from-to)230-240
JournalJournal of Economic Psychology
Volume31
Issue number2
Publication statusPublished - 2010

Fingerprint

Football
auction
evidence
willingness to pay
Reference point
Auctions
Reserve price

Cite this

@article{5728f03f29ee429a9a8caba14d6c31cd,
title = "Reserve prices as reference points – Evidence from auctions for football players at Hattrick.org",
abstract = "We study the impact of sellers’ reserve prices on transfer prices in online auctions of virtual football players at Hattrick.org. We introduce an empirical model that distinguishes between two separate effects from public reserve prices: (1) a mechanical effect, which is driven by the design of the English auction and (2) a psychological reference-dependence effect through reserve prices serving as reference points. The psychological effect has recently been introduced in behavioral models of situations where agents are uncertain about their own willingness-to-pay, while the mechanical effect is well captured by standard auction theory. Controlling for censoring when players are not sold, both effects are observed. Once we account for the potential endogeneity of reserve prices, however, we do not find evidence for reference dependence in Hattrick auctions.",
author = "S.T. Trautmann and C. Traxler",
year = "2010",
language = "English",
volume = "31",
pages = "230--240",
journal = "Journal of Economic Psychology",
issn = "0167-4870",
publisher = "Elsevier Science BV",
number = "2",

}

Reserve prices as reference points – Evidence from auctions for football players at Hattrick.org. / Trautmann, S.T.; Traxler, C.

In: Journal of Economic Psychology, Vol. 31, No. 2, 2010, p. 230-240.

Research output: Contribution to journalArticleScientificpeer-review

TY - JOUR

T1 - Reserve prices as reference points – Evidence from auctions for football players at Hattrick.org

AU - Trautmann, S.T.

AU - Traxler, C.

PY - 2010

Y1 - 2010

N2 - We study the impact of sellers’ reserve prices on transfer prices in online auctions of virtual football players at Hattrick.org. We introduce an empirical model that distinguishes between two separate effects from public reserve prices: (1) a mechanical effect, which is driven by the design of the English auction and (2) a psychological reference-dependence effect through reserve prices serving as reference points. The psychological effect has recently been introduced in behavioral models of situations where agents are uncertain about their own willingness-to-pay, while the mechanical effect is well captured by standard auction theory. Controlling for censoring when players are not sold, both effects are observed. Once we account for the potential endogeneity of reserve prices, however, we do not find evidence for reference dependence in Hattrick auctions.

AB - We study the impact of sellers’ reserve prices on transfer prices in online auctions of virtual football players at Hattrick.org. We introduce an empirical model that distinguishes between two separate effects from public reserve prices: (1) a mechanical effect, which is driven by the design of the English auction and (2) a psychological reference-dependence effect through reserve prices serving as reference points. The psychological effect has recently been introduced in behavioral models of situations where agents are uncertain about their own willingness-to-pay, while the mechanical effect is well captured by standard auction theory. Controlling for censoring when players are not sold, both effects are observed. Once we account for the potential endogeneity of reserve prices, however, we do not find evidence for reference dependence in Hattrick auctions.

M3 - Article

VL - 31

SP - 230

EP - 240

JO - Journal of Economic Psychology

JF - Journal of Economic Psychology

SN - 0167-4870

IS - 2

ER -