Star-shaped probability weighting functions and overbidding in first-price auctions
There is a debate about whether risk aversion is the main source of overbidding in a first-price independent private values auction. As an alternative, we adopt a non-expected utility framework, and identify an interpretable property on the probability weighting function which always induces overbidding.
Year of publication: |
2009
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Authors: | Armantier, Olivier ; Treich, Nicolas |
Published in: |
Economics Letters. - Elsevier, ISSN 0165-1765. - Vol. 104.2009, 2, p. 83-85
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Publisher: |
Elsevier |
Keywords: | Probability weighting function Auctions Overbidding Non-expected utility Risk aversion |
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