Bidding in Open-Outcry Situations

  • Continue bidding up to your full reservation value.
  • Whenever common value plays a role, bidders should rationally “update” their reservation value during the course of the bidding. E.g. the layman bidder takes cues from an expert with insider knowledge.
  • Three factors fuel “competitive arousal:” intense rivalry among bidders, time pressure, and the presence of an audience.

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