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 …

, 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. …