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decreasing bidders' risk significantly reduces the degree of overbidding relative to the risk-neutral Bayesian-Nash equilibrium …-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 …We introduce a new method of varying the risk that bidders face in first-price private value auctions. We find that …
Persistent link: https://www.econbiz.de/10005090580
We present results from a series of experiments that allow us to measure overbidding and, in particular, underbidding …
Persistent link: https://www.econbiz.de/10004970274
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 …
Persistent link: https://www.econbiz.de/10005671119
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 …
Persistent link: https://www.econbiz.de/10005114473
, and higher biddersʼ payoffs. Under risk neutrality, the members of the strong party benefit less than the weak bidders …. The prediction is reversed when the bidders are sufficiently risk-averse. These hypotheses are tested experimentally …–group differences based on differences in risk attitudes is not supported by the data. …
Persistent link: https://www.econbiz.de/10011049873
as predicted by the risk neutral Nash equilibrium. Consequently, bids are more likely to be above [below] the equilibrium …
Persistent link: https://www.econbiz.de/10005242944
Persistent link: https://www.econbiz.de/10005478604
We use a second-price common-value auction, the maximal game, to experimentally study whether the Winner’s Curse (WC) can be explained by models which retain best-response behavior but allow for inconsistent beliefs. In the maximal game, the WC can be rationalized only by a belief that others...
Persistent link: https://www.econbiz.de/10005481561
We examine bidding behaviour of individuals and teams in an experimental auction resembling UMTS-license auctions. Even though in reality teams were largely involved in those auctions, experimental studies on bidding in auctions have so far relied on individual bidders. Our results show that...
Persistent link: https://www.econbiz.de/10005432661
We examine theoretically and experimentally two countervailing effects of collusion and symmetric mergers among bidders. On one hand, the pooling of information within bidding rings increases the precision of competing estimates. We demonstrate that, in average value auctions, this leads to more...
Persistent link: https://www.econbiz.de/10005407619