Utility Equivalence in Sealed Bid Auctions and the Duel Theory of Choice Under Risk
AbstractThis paper analyzes symmetric, single item auctions in the private values framework, with buyers whose preferences satisfy the axioms of Yaari's (1987) dual theory of choice under risk. It is shown that when their valuations are independently and identically distributed, buyers are indifferent among all the auctions contained in a big family of mechanisms which includes the standard auctions. It is also shown that in the linear equilibria of the sealed bid double auction, as the degree of players' risk aversion grows arbitrarily large, the ex post inefficiency of the mechanism tends to vanish.
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Bibliographic InfoPaper provided by Brown University, Department of Economics in its series Working Papers with number 99-8.
Date of creation: 1999
Date of revision:
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Postal: Department of Economics, Brown University, Providence, RI 02912
Other versions of this item:
- Oscar Volij, 1999. "Utility Equivalence in Sealed Bid Auctions and the Dual Theory of Choice Under Risk," Economic theory and game theory, Oscar Volij 009, Oscar Volij, revised 25 Mar 1999.
- 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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- Volij, Oscar & Winter, Eyal, 2002.
"On risk aversion and bargaining outcomes,"
Games and Economic Behavior, Elsevier,
Elsevier, vol. 41(1), pages 120-140, October.
- Volij, Oscar & Winter, Eyal, 2002. "On Risk Aversion and Bargaining Outcomes," Staff General Research Papers, Iowa State University, Department of Economics 10130, Iowa State University, Department of Economics.
- Oscar Volij, 1999. "On Risk Aversion and Bargaining Outcomes," Economic theory and game theory, Oscar Volij 010, Oscar Volij.
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