The benchmark risk-averse equilibrium model does not explain some of the outcomes obtained in experiments with first-price auctions.Nonetheless, the presence of non-linear bidding and the wide dispersion of bids have received little attention in the literature.I Garment Steamer focus on these issues and revisit previous laboratory evidence with the help of model-based clustering techniques.
The rejection of equilibrium models is found to be mostly due to the significance of non-linear bidding rules and the unexplained heterogeneity.With the use of a mixture model, the observations are classified into four groups or clusters.Significant differences between individuals and suede-chinks-with-basketweave-accents clusters are found, but so is a persistent within individual variation, which leads us to conclude that subjects do not commit to one particular bidding strategy and alternate across several processes.