Subjects in Auctions Learning to Bid More Efficiently Over Time
In second-price auctions, where the highest bidder wins but pays the second-highest bid, people tend to bid more than what they think the item is worth. Even with experience, they don't learn to bid closer to the actual value. However, a new analysis of old auction data shows that auction efficiency is improving over time. This is because bidders are becoming more consistent in their overbidding, which means they are learning to bid more similarly to each other.