Super-Experienced Bidders in First-Price Common-Value Auctions: Rules of Thumb, NASH Equilibrium Bidding, and the Winner's Curse

Super-experienced bidders have learned to overcome the winner's curse but still earn less than 50% of Nash equilibrium profits. Subjects deviate from the complicated Nash strategy, employing piecewise-linear bid functions that are capable, in principle, of generating an equilibrium with average profits at or above the Nash benchmark. Thus, limited computational abilities alone cannot account for the reduced earnings. Further, subjects are far from best responding within this family of piecewise-linear bid functions. Alternative factors contributing to these reduced earnings are explored.