Analysis of bidding behaviors in non-monetary incentivized, real-time uniform auctions

Abstract

The Navy continually fights economic surge and recession, budget constraints, and natural personnel turnover to maintain personnel levels at desired "end-strength." Forecasting retention bonus levels based on these socio-economic factors is extremely difficult. Current forecasting techniques are less precise than retention auctions because auctions provide the market clearing price to retain the desired end strength. This research examines bidding strategies adopted within a retention auction incorporating monetary and non-monetary retention incentives in a competitive bidding environment. This research compared user inputs across several subjects and determined which subjects to retain. Previous experiments compared participants' bids to computer simulated "optimal" bids

it was hard to say how or if bidding strategies would change if competing with other live players. There are two issues when dealing with optimal bidding strategies. The first is correct choosing non-monetary incentives. We found that 70% of these choices were made correctly. The second involves the salary requested after choosing non-monetary incentives. The salary requests were above the optimal bids. Coupled with the fact that non-monetary incentives were generally chosen correctly, this shows that most participants miscalculated their salary request. Other controls and instructions should be introduced prior to implementing a formal retention auction