Auction Design with Loss Averse Bidders: The Optimality of All Pay Mechanisms
AbstractAuctioneers who have an indivisible object for sale and believe that bidders are risk neutral can find the recipe for an optimal auction in Myerson (1981); auctioneers who believe that bidders are loss averse can find it here: An optimal auction is an all pay auction with minimum bid, and any optimal mechanism is all pay.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 23357.
Date of creation: 16 Jun 2010
Date of revision:
Auctions; Loss Aversion; All Pay Mechanisms; Mechanism Design; Revenue Equivalence;
Find related papers by JEL classification:
- D03 - Microeconomics - - General - - - Behavioral Microeconomics; Underlying Principles
- D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law
- D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
- D44 - Microeconomics - - Market Structure and Pricing - - - Auctions
- C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-06-26 (All new papers)
- NEP-CTA-2010-06-26 (Contract Theory & Applications)
- NEP-EXP-2010-06-26 (Experimental Economics)
- NEP-UPT-2010-06-26 (Utility Models & Prospect Theory)
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