Auctions under
Foreign Influence
By Zoë Cullen
&
Benjamin Harrell
Assumptions

Based on research by Robert Aumann in a paper
called Agreeing to Disagree, and research by
Nancy Stokey and Paul Milgrom called No Trade
Theorem, we made certain assumptions:


Regardless of what your valuation was, you would
take into account your companions valuation, which
would, in turn, affect your own valuation.
Thus, final valuations would be relatively closer to
each other than first valuations.
More Assumptions


We thus hypothesized that people would
chose to come to an agreement before
ending the information exchanges
voluntarily.
We also expected people to be consistent
in integrating their partner’s information
(or how important their valuation was).
Results



The average relative difference for each
item (relative to 0) in the first valuation of
rounds 1-7 was 7.5694
The average relative difference for for
each item (relative to 0) in the last
valuation of rounds 1-7 was 1.1517
SEE GRAPH
Results



The average relative difference for each
item (relative to 0) in the first valuation of
rounds 8-13 was 6.2903
The average relative difference for for
each item (relative to 0) in the last
valuation of rounds 8-13 was 0.7757
SEE GRAPH
Results






After 0 exchanges (1 valuations), the average
relative difference was 629%
With 1 exchange (2 valuations), the average
relative difference was 115%
With 2 exchanges, the avg. relative difference
fell to 34%
With 3 exchanges, the avg. relative difference
fell to 28%
With 4 exchanges, the avg. relative difference
fell to 18%
SEE GRAPH
Interesting Results


When allowed to chose as many rounds of
exchanges as desired, (the moped round),
the average relative difference was .706
When forced to do at least 3 exchanges,
and then allowed to continue if desired,
the average relative difference was .216
Interesting Findings

Each of you was asked to quantify your own
guessing abilities as well as those of your
partners.


While many said that your companion’s ability to
guess the correct price ranged from between 0.5 to 5,
there was almost no correlation between how high
you ranked your companion, and how much you took
into account his/her guess.
In other words, even if you thought your companion
was horrible at guessing, their bid still weighed
heavily on your final decision nearly all of the time.
The Winner





The winner was not only the most accurate
guesser, guessing closest on his first guess than
anyone else on 3 occasions….
He also was the only person to win an auction
and not lose money in the transaction, making a
$14 profit on the shopping cart.
A fantastic prize has been arranged and will be
delivered to…
Number…
Three
Thank You
We appreciate your cooperation.
ARE THERE ANY QUESTIONS?