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 InfoPaper provided by Toulouse School of Economics (TSE) in its series TSE Working Papers with number 09-024.
Date of creation: Mar 2009
Date of revision:
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," Economics Letters, Elsevier, vol. 104(2), pages 83-85, August.
- 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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