Abstract
We examined gender differences in bidding and learning behavior in Second Price Auctions (SPAs). Although bidding one’s true value is a weakly dominant strategy in SPAs, overbidding has been common and persistent in laboratory SPAs, i.e., bidding above one’s value. In our study, we found that inexperienced women overbid more than inexperienced men when they were provided with endowment money in the auctions. However, when participants were asked to bid using their own money, women became more cautious, bidding lower and closer to the optimal strategy (true value) even without experiences, while inexperienced men still deviated from the optimal strategy by overbidding significantly. As men gained more experiences, they learned from costly overbidding and eventually lowered their bids to the same level as those of women’s bids. In conclusion, we found that although women and men initially behaved differently in SPAs, both genders would eventually bid according to the optimal strategy and obtain the same outcome given sufficient learning experiences.
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