The effects of allowing substitutes on bidding behavior in a private value experimental auction

Objectives of this study were to investigate the effect of the availability of substitutes on participants’ bidding behaviors in a private value experimental auction, and to identify whether the availability of additional substitutes decrease the value of product information, and mitigate the effect of new information on product valuations. We created the unique experimental design to examine three research objectives. Our results showed that allowing substitutes in a privately valued auction did not significantly affect subjects’ bidding behaviors while it decreased value and effect of product information.