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:	2009-03
Authors:	Armantier, Olivier ; Treich, Nicolas
Institutions:	Toulouse School of Economics (TSE)
Subject:	probability weighting function \| auctions \| overbidding \| non-expected utility \| risk aversion

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Extent:	application/pdf
Series:	TSE Working Papers.
Type of publication:	Book / Working Paper
Language:	English
Notes:	The text is part of a series TSE Working Paper Number 09-024
Classification:	C70 - Game Theory and Bargaining Theory. General ; C92 - Laboratory; Group Behavior ; D44 - Auctions ; D81 - Criteria for Decision-Making under Risk and Uncertainty
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10008465360