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http://hdl.handle.net/10419/25706
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| Title: | | A pure variation of risk in first-price auctions  |
| Authors: | | Kirchkamp, Oliver Reiss, J. Philipp Sadrieh, Abdolkarim |
| Issue Date: | | 2006 |
| Series/Report no.: | | Jena economic research papers 2008,024 |
| Abstract: | | 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. |
| Subjects: | | risk first-price auctions risk-aversion overbidding |
| JEL: | | C92 D44 |
| Document Type: | | Working Paper |
| Appears in Collections: | | Jena Economic Research Papers, MPI für Ökonomik
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