Bidding behavior given point and interval values in a second-price auction

Prasenjit Banerjee, Jason F. Shogren

Research output: Contribution to journalArticlepeer-review


Although rational choice theory presumes people have a point estimate of their willingness to pay (WTP) for a good or service, the idea of coherent arbitrariness suggests they have an interval of values. Herein we explore bidding behavior in a second-price auction in which bidders have point or interval values and point or interval bidding. We find bidders bid rationally: (i) when bidders have a point value but are asked to state an interval bid, they choose to bid as an interval with the point value as the mean of the interval; (ii) bidders who had a value interval but are asked to bid as a point estimate bid the expected value from the interval; and (iii) bidders with an interval value and who bid an interval such that expected bids equate expected values. © 2013 Elsevier B.V.
Original languageEnglish
Pages (from-to)126-137
Number of pages11
JournalJournal of Economic Behavior and Organization
Early online date23 Oct 2013
Publication statusPublished - Jan 2014


  • Bidding behavior
  • Interval values
  • Preference elicitation
  • Second price auction


Dive into the research topics of 'Bidding behavior given point and interval values in a second-price auction'. Together they form a unique fingerprint.

Cite this