Oliver, Kirchkamp; Philipp, Reiss J.; Abdolkarim, Sadrieh - Graduate School of Business and Economics (GSBE), … - 2006
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 affects bidding...