We present results from a series of experiments that allow us to measure overbidding and, in particular, underbidding …

First-price auction experiments find often substantial overbidding which is typically related to risk aversion. We … introduce a model where some bidders use constrained linear bids. As with risk aversion this leads to overbidding if valuations … are high, but in contrast to risk aversion the model predicts underbidding if valuations are low. We test this model with …

We analyse bidding behaviour in auctions when risk-averse buyers bid for a good whose value is risky. We show that when … risk in the valuations increases, DARA bidders will reduce their bids by more than the appropriate increase in the risk … marginal utility of income increases with risk, so buyers are reluctant to bid so highly. We also show that precautionary …

This paper demonstrates theoretically and experimentally that in first price auctions, overbidding with respect to risk …

policies. While academic research has largely dismissed the procedure owing to its tendency to encourage overbidding, central … an auction-theoretic setting with private information about declining marginal valuations. Since overbidding entails … exposure risk, an equilibrium may exist even if bids are costless and the intended volume is pre-announced. In fact, the …

Despite the possibility of overbidding, the Eurosystem has con- tinued using the fixed rate tender in its liquidity … of strate- gic overbidding is limited, and there is a bound below which the allotment quota never falls. In an extension … with adaptive expectations, temporarily elevated overbidding factors quickly return to equilibrium levels. …

We consider a takeover in which risk neutral bidders must incur participation costs and study their optimal strategy …

between the bidders? valuation. We consider risk neutral bidders who compete for the control of a target firm in which they …. Particularly, we found that if a potential bidder overbids when he gets toeholds in the target firm, the extent of overbidding is …

, which induces overbidding in all (first-price) auctions. In addition, it biases the perceived value distribution, which …