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Robustness Of Bidder Preferences Among Auction Institutions

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  • RADOSVETA IVANOVA-STENZEL
  • TIMOTHY C. SALMON

Abstract

"In previous work, we found that bidders strongly prefer the ascending to the first-price sealed-bid auction on a ceteris paribus basis, but perhaps surprisingly, they are not willing to pay up to an entry price for the ascending auction that would equalize the profits. Risk aversion was proposed as an explanation. In this study, we examine two alternative explanations for the observed behavior: loss aversion and aversion to the dynamic bidding process. We find that neither alternative explanation can account for bidders' auction choice behavior, leaving risk aversion as the only unfalsified hypothesis. "("JEL "C91, D44) Copyright (c) 2008 Western Economic Association International.

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Bibliographic Info

Article provided by Western Economic Association International in its journal Economic Inquiry.

Volume (Year): 46 (2008)
Issue (Month): 3 (07)
Pages: 355-368

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Handle: RePEc:bla:ecinqu:v:46:y:2008:i:3:p:355-368

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Cited by:
  1. Prasad, Kislaya & Salmon, Timothy C., 2013. "Self Selection and market power in risk sharing contracts," Journal of Economic Behavior & Organization, Elsevier, vol. 90(C), pages 71-86.
  2. Arnaud Reynaud & Stéphane Couture, 2012. "Stability of risk preference measures: results from a field experiment on French farmers," Theory and Decision, Springer, vol. 73(2), pages 203-221, August.
  3. Radosveta Ivanova-Stenzel & Timothy Salmon, 2009. "The High/Low Divide: Self-Selection by Values in Auction Choice," Working Papers wp2009_06_02, Department of Economics, Florida State University.
  4. Ertaç, Seda & Hortaçsu, Ali & Roberts, James W., 2011. "Entry into auctions: An experimental analysis," International Journal of Industrial Organization, Elsevier, vol. 29(2), pages 168-178, March.

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