- A-Z
- Jena Economic Resea...
- Volume 2
- A pure variation of...
- Autor(in)
-
Friedrich-Schiller-Universität Jena. Wirtschaftswissenschaftliche Fakultät
- Erschienen
- 19. März 2008
- Nummer des Discussion-Papers
-
2008-024
- Schlagwort(e)
-
first-price auctions
overbidding
risk
risk-aversion
- Zusammenfsg.
-
We introduce a new method of varying the risk that bidders face in first-price private value auctions. We find 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 significant degree of underbidding sets in for very low values.
- article pub. typess JER
- Research article
- article languages JER
- Englisch
- article research fields JER
- experimental economics
- JEL-Classification for JER
- C92 - Laboratory, Group Behavior ; D44 - Auctions