An empirical investigation of rewards’ effect on experimental auctions outcomes

Abstract

We examine the effect of earned participation rewards on willingness to pay (WTP) bids in experimental auctions. Our results show that when subjects are provided with a fixed reward, they bid more than those who had to earn their reward.

Keywords:

• experimental auctions
• earned participation rewards
• willingness to pay (WTP)

JEL Classification:

• D44
• C92
• Q13

Acknowledgements

The authors would like to thank Prof. Jason L. Lusk for his helpful inputs in designing the experiment and valuable suggestions and comments on a previous version of the paper. The authors assume full responsibility for any remaining errors.