Venerdì 30 gennaio, h. 12.00

 

 

 

Several experimental studies have reported that an otherwise robust regularity – the Willingness-To-Accept/Willingness-To-Pay disparity – tends to be greatly reduced in repeated auctions, posing a challenge to existing reference-dependent and referenceindependent models. This paper offers a coherent theoretical account of the experimental evidence based on the assumptions that individuals are price sensitive – i.e. affected by good and bad deals relative to the expected price – and 'bad-deal' averse – i.e. more influenced by bad deals than by good deals. It is shown that Willingness-To-Accept exceeds Willingness-To-Pay whenever the expected price differs from the reference-independent valuation, the disparity being larger the larger this difference. In repeated Vickrey auctions, expectation updating explains the

tendency of valuations to converge to observed prices and their responsiveness to different auction rules. The market price reflects the reference-independent valuation of the marginal trader in equilibrium.