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 …

first movers bids. There is a unique equilibrium in the first-price auction and multiple equilibria in the second …-price auction. Consequently, comparative statics across price rules are equivocal. We experimentally find that in the first …-price auction, leaks benefit second movers but harm first movers and sellers. Low to medium probabilities of leak eliminate the …