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- Title
RISK AVERSION AND OVERBIDDING IN FIRST PRICE SEALED BID AUCTIONS: NEW EXPERIMENTAL EVIDENCE.
- Authors
Füllbrunn, Sascha; Janssen, Dirk‐Jan; Weitzel, Utz
- Abstract
Bidding above the risk‐neutral Nash equilibrium in first price sealed bid auctions has traditionally been ascribed to risk aversion. Later studies, however, offer other explanations and even argue that risk aversion plays no or a minor role. In a novel experimental design, we directly test the relationship between risk aversion and overbidding by systematically varying the distribution of risk attitudes in auction markets. We find a significant relationship between our measure of risk aversion and overbidding.
- Subjects
BIDS; RISK aversion; NASH equilibrium; AUCTIONS; BID price
- Publication
Economic Inquiry, 2019, Vol 57, Issue 1, p631
- ISSN
0095-2583
- Publication type
Article
- DOI
10.1111/ecin.12716