English, Article, Journal or magazine article edition: A pure variation of risk in first-price auctions Oliver Kirchkamp; J. Philipp Reiß; Abdolkarim Sadrieh

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Bookmark: http://trove.nla.gov.au/version/1001
Physical Description
  • preprint
Language
  • English

Edition details

Title
  • A pure variation of risk in first-price auctions
Author
  • Oliver Kirchkamp
  • J. Philipp Reiß
  • Abdolkarim Sadrieh
Physical Description
  • preprint
Notes
  • We introduce a new method of varying the risk that bidders face in first-price private value auctions. We find that decreasing bidders' risk significantly 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 significant degree of underbidding sets in for very low values.
  • risk, fist-price auctions, risk-aversion, overbidding
  • RePEc:jrp:jrpwrp:2008-024
Language
  • English
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