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...

We analyse the optimal auction of multiple non-identical objects when buyers are risk averse. We show that the auction formats that yield the maximum revenue in the risk neutral case are no longer optimal. In particular, selling the goods independently does not maximize the seller's revenue. We...

Short-term electricity markets are key to an efficient production by generation units. We develop a two-period model to assess different bidding formats to determine for each bidding format the optimal bidding strategy of competitive generators facing price-uncertainty. We compare the results...

A perfectly divisible corporate bond is allocated to a set of bidders characterized by limits both to their budget, but most importantly to the risk entailed in their portfolio. Bidders possess symmetric information concerning the secondary market's yield. We choose to use a uniform pricing...

After the close of an auction, the winning bidder may find that he is unable to carry out his bid offer. This paper seeks to determine what measures the seller should take to maximize his share of the surplus when bidders are privately informed about their risk of default. Special attention is...

A fundamental result of contest theory is that evenly matched contests are fought most intensely, implying that a contest designer maximizes effort from each contestant by artificially boosting the chances of the underdog. Such "handicapping" is credited with making sports contests more...

We investigate the possibility of enhancing efficiency by awarding premiums to a set of highest bidders in an English auction - in a setting that extends Maskin and Riley (1984, Econometrica 52: 1473-1518) in three aspects: (i) the seller can be risk averse, (ii) the bidders can have...

In the context of first-price auctions with asymmetrically informed bidders, we show that risk aversion not only increases a player's bid, but also makes him less sensitive to the probability that other bidders are informed about his private valuation