Auction Form Preferences of Risk-Averse Bid Takers
We analyze the preferences of a risk-averse seller over the class of "standard" auctions with symmetric and risk-neutral bidders. Assuming that buyers' private signals are independently distributed, we find that a sealed-bid first-price auction with an appropriately set reserve price is preferred by all risk-averse sellers to any other standard auction. In first- and second-price auctions, the more risk averse a seller, the lower the seller's optimal reserve price. Given two first-price auctions with reserve prices and entry fees such that both have the same screening level, all risk-averse sellers prefer the auction with the lower entry fee.
Year of publication: |
1998
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Authors: | Waehrer, Keith ; Harstad, Ronald M. ; Rothkopf, Michael H. |
Published in: |
RAND Journal of Economics. - The RAND Corporation, ISSN 0741-6261. - Vol. 29.1998, 1, p. 179-192
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Publisher: |
The RAND Corporation |
Saved in:
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