In a premium auction, the seller offers some “payback”, called premium, to a set of high bidders at the end of the auction. This paper investigates how the performance of such premium tactics is related to the biddersʼ risk preferences. We analyze a two-stage English premium auction model...

We investigate necessary and sufficient conditions for threat-based incentive mechanisms (TBIMs), an extension of the Mirrlees's schemes, to approximately eliminate moral hazard in a principal-agent relationship with both problems of moral hazard and adverse selection. Assuming normal...

We analyze the effects of buyer and seller risk aversion in first- and second-price auctions in the classic setting of symmetric and independent private values. We show that the seller's optimal reserve price decreases in his own risk aversion, and more so in the first-price auction. The reserve...