Earned Wealth, Engaged Bidders? Evidence from a second price auction

Abstract

Recent work in experimental economics has explored whether observed behavior depends on whether wealth was windfall or earned. This paper extends this work by considering whether earned wealth ffects bidding behavior in an induced-value second-price auction. We find people bid more sincerely in the auction with earned wealth given monetary incentives; earned wealth did not induce sincere bidding in hypothetical auctions.Auctions; Demand revelation; Experimental valuation; Hypothetical bias; Earned Money