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Bose, Subir; Ozdenoren, Emre; Pape, Andreas D. - In: Theoretical economics : TE ; an open access journal in … 1 (2006) 4, pp. 411-438

A crucial assumption in the optimal auction literature is that each bidder's valuation is known to be drawn from a unique distribution. In this paper we study the optimal auction problem allowing for ambiguity about the distribution of valuations. Agents may be ambiguity averse (modeled using...

Persistent link: https://www.econbiz.de/10011702781

Bidding with Securities under Risk Aversion : The Role of Steepness as Insurance

Fioriti, Andres - 2019

winner's payment to the seller. De Marzo et al. (2005) show that in an environment with risk-neutral seller and bidders …, steeper securities increase the seller's expected revenue but do not affect the efficiency of the auction. We introduce risk … insurance levels the field for more risk-averse bidders, inducing them to bid more aggressively and improving the revenue and …

Persistent link: https://www.econbiz.de/10012865568

Endogenous worst-case beliefs in first-price auctions

Gretschko, Vitali; Mass, Helene - 2018

Bidding in first-price auctions crucially depends on the beliefs of the bidders about their competitors' willingness to pay. We analyze bidding behavior in a first-price auction in which the knowledge of the bidders about the distribution of their competitors' valuations is restricted to the...

Persistent link: https://www.econbiz.de/10011946017

Competing Sellers in Security-Bid Auctions under Risk-Averse Bidders

Carrasco, Diego; Hernandez-Chanto, Allan - 2022

We analyze security-bid auctions in which two risk-neutral sellers compete for risk-averse bidders. Sellers face a … risk-averse, all equilibria are symmetric. Meanwhile, when they are heterogeneously risk-averse, there is always an … equilibrium in which one seller chooses a steeper family to serve the more-risk-averse bidders, while the other chooses a flatter …

Persistent link: https://www.econbiz.de/10013289775

Auctions under payoff uncertainty : the case with heterogeneous bidder-aversion to downside risk

Hu, Audrey Xianhua; Zou, Liang - 2008

common knowledge, except that bidders have private degrees of aversion to downside-risk. In this model, the optimal FPA … risk or risk aversion generally leads to lower equilibrium bids. …

Persistent link: https://www.econbiz.de/10011374400

Spite vs. risk : explaining overbidding

Kirchkamp, Oliver; Mill, Wladislaw - 2019

In this paper we use an experiment to compare a theory of risk aversion and a theory of spite as an explanation for … overbidding in auctions. As a workhorse we use the second-price all-pay and the first-price winner-pay auction. Both risk and … spite can be used to rationalize deviations from risk neutral equilibrium bids in auctions. We exploit that equilibrium …

Persistent link: https://www.econbiz.de/10012002983

Risk Aversion in Auctions with Asymmetrically Informed Bidders : A “Desensitizer” from Uncertainty

Munoz-Garcia, Felix - 2011

In the context of first-price auctions with asymmetrically informed bidders, we show that risk aversion not only …

Persistent link: https://www.econbiz.de/10013125720

How risk sharing may enhance efficiency in English auctions

Hu, Audrey; Offerman, Theo; Zou, Liang - 2014

be risk averse, (ii) the bidders can have heterogeneous risk preferences, and (iii) the auction can have a binding … reserve price. Our analysis reveals that the premium has an intricate joint effect on risk sharing and expected revenue, which … in general benefits risk averse bidders. When the seller is more risk averse than the pivotal bidder - a condition often …

Persistent link: https://www.econbiz.de/10010234599

Disentangling Risk-Aversion and Loss Aversion in First-Price Auctions : An Empirical Approach

Kim, Dong-hyuk - 2020

We develop a model which combines general risk-averse preferences with anticipated loss aversion to explain bidding … behavior in the first-price auction, where both risk-aversion and loss aversion induce ‘overbidding.' We then show that the …

Persistent link: https://www.econbiz.de/10012843631

Signaling Equilibria in Takeovers with Risk-averse Bidders

Carrasco, Diego; Hernandez-Chanto, Allan - 2023

We analyze takeover operations in which (i) bidding firms are risk-averse; (ii) offers can be made using cash or equity …

Persistent link: https://www.econbiz.de/10014258241