A fundamental assumption in public finance is that individuals consider taxes when making economic choices. Indeed, a voluminous literature shows that taxes significantly influence behavior along several margins including labor supply, portfolio allocations, and savings.1 The literature typically assumes that individuals understand the tax schedule they face, and therefore the standard interpretation is that these behavioral responses arise from changes in tax rates.

This study presents a theoretical model and laboratory experiment of the first and second price sealed bid auctions with independent private values, where the distribution of bidder valuations is unknown. We derive the symmetric equilibrium using the α-MEU framework. We then test the theoretical predictions in the laboratory. In our experimental setting, ambiguity aversion is rejected in favor of ambiguity loving. Our results suggest that decision makers' ambiguity attitudes are context dependent. Another departure from previous experimental studies is the use of subjects as auctioneers. We find that compared to zero reserve prices the presence of auctioneers significantly reduces revenue in first price auctions. It also significantly reduces bidder earnings and efficiency. Without knowledge of the distribution of bidder valuations and with auctioneers, the first and second price auctions generate the same amount of revenue.

ISBN 80-7343-069-X (Univerzita Karlova v Praze, CERGE) ISBN 80-7344-058-X (Národohospodářský ústav AV ČR, Praha) AbstractWe find robust gender differences in bidding behavior in sealed bid auctions with independent and private valuations in a laboratory setting. In particular, we find that women bid significantly higher and earn significantly less than men do in the first-price auction, while we find no evidence of a gender difference in the likelihood of dominant strategy play in the second-price auction. At a biological level, in the first-price auction, women during menstruation, when the estrogen level is lowest, do not bid differently from men. The gender difference in the first-price auction is driven by women during other phases of the menstrual cycle when they have higher estrogen levels. AbstraktTáto štúdia dokumentuje výrazné rozdiely podl'a pohlavia v aukciách s neverejnými ponukami a nezávislými hodnotami v prostredí laboratória. Konkrétne, výsledky ukazujú, že ženy dávajú systematicky vyššie ponuky než muži a získavajú menej než muži v prvocenových aukciách, avšak pravdepodobnost' hrania dominantnej stratégie v druhocenových aukciách nie je štatisticky odlišná u mužov a žien. Na biologickej úrovni, výsledky ukazujú že v prvocenových aukciách, počas menštruácie, ked' je úroveň estrogénu najnižšia, dražobné ponuky žien sa štatisticky nelíšia od ponúk mužov. Rozdiel medzi dražobnými ponukami mužov a žien v prvocenových aukciách je spôsobený ženami v ostatných fázach menštruačného cyklu, v ktorých je úroveň estrogénu vyššia.2

Are individuals who trust others better off than those who do not? Do trustworthy people prosper more than untrustworthy ones? We first pose these questions in a search model where individuals face repeated choices between trusting (initiating an investment transaction) and not trusting, and between being trustworthy (not stealing the investment) and cheating. We then derive predictions for the relationship between observed individual behavior, aggregate attitudes, and individual prosperity. Finally, we evaluate these predictions empirically using household-level data for eighteen (mostly developed) countries from the World Values Survey. We find that, on average, a trusting attitude has a positive impact on income, while trustworthiness has a negative impact on income. In addition, we find evidence of complementarity between these two attitudes and the aggregate levels of the complementary attitudes. Most strikingly, the payoff to being trustworthy depends positively on the aggregate amount of trust in a given country.

We find robust gender differences in bidding behavior in sealed bid auctions with independent and private valuations in a laboratory setting. In particular, we find that women bid significantly higher and earn significantly less than men do in the first-price auction, while we find no evidence of a gender difference in the likelihood of dominant strategy play in the second-price auction. At a biological level, in the first-price auction, women during menstruation, when the estrogen level is lowest, do not bid differently from men. The gender difference in the first-price auction is driven by women during other phases of the menstrual cycle when they have higher estrogen levels.