Table 5 -Average Seller’s Revenues (and Standard Deviation)
|
Observed |
RNNE |
RANE | |
|
LOW |
24.87 |
12.50 |
23.06 |
|
_______(9 obs)______ |
(4.47) |
(.74) |
(1.16) |
|
MIX |
18.51 |
10.61 |
21.15 |
|
_______(9 obs)______ |
(5.35) |
(.33) |
(.56) |
|
SYM |
42.47 |
33.40 |
44.53 |
|
_______(6 obs)______ |
(3.89) |
(.66) |
(.88) |
3.2. Nash equilibrium behavior, Empirical Best Replies and shapes
of bid functions
3.2.1. Nash Equilibrium Behavior
The plots in Figure 1 show that the average bid functions are better tracked by the RANE
prediction in the symmetric treatment than in the asymmetric treatments. In the latter,
although Strong bidders bid less aggressively than Weak bidders for equal values, they
overbid mostly at low values, which is inconsistent with the risk neutral or risk averse
equilibriumpredictionsforthesetreatments.
To assess the explanatory power of these models, we compare the Relative Squared
DeviationsfromtheRNNEandRANEbidfunctions(henceforth,RSD).WedefineRSDfor
biddertypeiinroundtas
wherebi*(v) standsfortheRNNEortheRANEbidfunctionoftypeiandthedenominatorfor
RSDit =
max<
ɪ, г , 2
∑ [bit(v) - bi*(v)]
v=0
2 2 2 2
∑[v-bi*(v)] ,∑[-bi*(v)]
v=0 v=0
fort = 1,...,100andi = S,W
themaximumpossibledeviationfromthatstrategy.
15