Star-shaped probability weighting functions and overbidding in first-price auctions

There is a debate about whether risk aversion is the main source of overbidding in a first-price independent private values auction. As an alternative, we adopt a non-expected utility framework, and identify an interpretable property on the probability weighting function which always induces overbidding.

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Year of publication:	2009
Authors:	Armantier, Olivier ; Treich, Nicolas
Published in:	Economics Letters. - Elsevier, ISSN 0165-1765. - Vol. 104.2009, 2, p. 83-85
Publisher:	Elsevier
Keywords:	Probability weighting function Auctions Overbidding Non-expected utility Risk aversion

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Type of publication:	Article
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10005066267