Star-shaped probability weighting functions and overbidding in first-price auctions
AbstractThere is a debate about whether risk aversion is the main source of overbidding in a first-price independent private values auction. As an alternative, we adopt a non-expected utility framework, and identify an interpretable property on the probability weighting function which always induces overbidding.
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Bibliographic InfoArticle provided by Elsevier in its journal Economics Letters.
Volume (Year): 104 (2009)
Issue (Month): 2 (August)
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Web page: http://www.elsevier.com/locate/ecolet
Probability weighting function Auctions Overbidding Non-expected utility Risk aversion;
Other versions of this item:
- Armantier, Olivier & Treich, Nicolas, 2009. "Star-Shaped Probability Weighting Functions and Overbidding in First-Price Auctions," TSE Working Papers 09-024, Toulouse School of Economics (TSE).
- C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
- C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
- D44 - Microeconomics - - Market Structure and Pricing - - - Auctions
- D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
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