Regret and information at first price auctions: a study with brazilian decision-makers

Abstract

Studies point out that the utility of the decision maker in the results depends on the profit. However, acting rationally in an auction environment can be difficult, and the reasons may be due to cognitive aspects such as regret. The "Winner's Regret" bias is characterized by the regret that the winner suffers for bidding too high compared to his opponent. The "Loser’s regret" comes from realizing that his very low bid made him lose. Therefore, the objective of this study was to investigate the effect of regret and information on first price auctions in Brazilian individuals and compare with studies conducted abroad, checking if there is a difference in bias amplitude. Initially, a literature review on behavioral operations, auctions and the effect of regret in auctions was performed. Regarding the methodology, the sample applied was non-probabilistic and for convenience. The experiment design had four treatments: Winner's Regret, Loser's Regret, Both and None, manipulated in a 4x1 experiment with college students. Regarding the winner's regret, the results were similar to studies abroad and in the hypothesis of the loser's regret the results were different.