Auction Theory from an All-Pay View: Buying Binary Lotteries
AbstractAn auction is viewed as a process that in equilibrium generates a binary lottery for each bidder,which the bidder "buys" with his bid. This view allows for a simple way to consistently assess differences in bidding behavior over different bidders and different auctions. E.g. all auctions covered by the Revenue Equivalence Theorem are shown to generate lotteries with identical probabilities, but different pay-offs. It is then argued, that understanding of (experimentally observed) bidding behavior in auctions is enhanced by drawing on the large literature on choice behavior over lotteries.
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Bibliographic InfoPaper provided by University of Dortmund, Department of Economics in its series Discussion Papers in Economics with number 00_06.
Length: 23 pages
Date of creation: Nov 2000
Date of revision:
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-06-17 (All new papers)
- NEP-GTH-2006-06-17 (Game Theory)
- NEP-UPT-2006-06-17 (Utility Models & Prospect Theory)
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