Behavioral Spillovers in Multi-Market Auctions: Modeling Cross-Auction Biases and Incentive Design

While behavioral economics is making inroads into mechanism design (see Dobzinski & Oren, 2021; Lu et al., 2025), most work focuses on a single marketplace or auction. However, in practice, agents often participate in multiple, simultaneous or sequential markets—think of airlines bidding for slots at several coordinated airports (Bichler et al., 2022), or job seekers engaging with multiple platforms (Pourbabaee et al., 2025). Behavioral tendencies like herding (Huang, 2022) or prospect-theoretic loss aversion (Liu et al., 2021; Li et al., 2019) may be amplified or mitigated by these cross-market interactions, leading to unanticipated market inefficiencies or strategic behaviors. This idea proposes formalizing and empirically testing the phenomenon of "behavioral spillovers"—how participation and outcomes in one market bias agent behavior in others—and then designing auction formats or incentive mechanisms that internalize or counteract these effects. This could involve hybrid mechanisms that dynamically adjust parameters based on observed or predicted cross-auction behavioral patterns, potentially leading to more robust, welfare-improving designs.

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