Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/198991
Authors: 
Kirchkamp, Oliver
Mill, Wladislaw
Year of Publication: 
2019
Series/Report no.: 
CESifo Working Paper 7631
Abstract: 
In this paper we use an experiment to compare a theory of risk aversion and a theory of spite as an explanation for overbidding in auctions. As a workhorse we use the second-price all-pay and the first-price winner-pay auction. Both risk and spite can be used to rationalize deviations from risk neutral equilibrium bids in auctions. We exploit that equilibrium predictions in the second-price all-pay auctions for spiteful preferences are different than those for risk averse preferences. Indeed, we find that spite is a more convincing explanation for bidding behavior for the second-price all-pay auction. Not only can spite rationalize observed bids, also our measure for spite is consistent with observed bids.
Subjects: 
auction
overbidding
spite
risk
experiment
JEL: 
C91
C72
D44
D91
Document Type: 
Working Paper

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