A pure variation of risk in first-price auctions

Arbeitspapier

We introduce a new method of varying the risk that bidders face in …rst-price private value auctions. We …nd that decreasing bidders’ risk signi…cantly reduces the degree of overbidding relative to the risk-neutral Bayesian-Nash equilibrium prediction. This implies that risk a¤ects bidding behavior as generally expected in auction theory. While resolving a long-standing debate on the e¤ect of risk on auction behavior, our results give rise to a new puzzle. As risk is diminished and overbidding decreases for most of the value range, a signi…cant degree of underbidding sets in for very low values.

Angaben zum Objekt

• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: Jena Economic Research Papers ; No. 2008,024

Klassifikation und Themen

• Klassifikation: Wirtschaft ; Design of Experiments: Laboratory, Group Behavior ; Auctions
• Thema: risk ; first-price auctions ; risk-aversion ; overbidding ; Auktionstheorie ; Risiko ; Risikoaversion

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Kirchkamp, Oliver ; Reiss, J. Philipp ; Sadrieh, Abdolkarim
• Ereignis: Veröffentlichung
• (wer): Friedrich Schiller University Jena and Max Planck Institute of Economics
• (wo): Jena
• (wann): 2006

Weitere Informationen

• Handle: http://hdl.handle.net/10419/25706
• Letzte Aktualisierung: 10.03.2025, 11:42 MEZ