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Journal article

Precautionary Bidding in Auctions.

Abstract:

We analyze bidding behavior in auctions when risk-averse buyers bid for a good whose value is risky. We show that when the risk in the valuations increases, DARA bidders will reduce their bids by more than the appropriate increase in the risk premium. Ceteris paribus, buyers will be better off bidding for a more risky object in first price, second price, and English auctions with affiliated common (interdependent) values. This "precautionary bidding" effect arises because the expected margina...

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Publication status:
Published
Peer review status:
Not peer reviewed

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Files:
Publisher copy:
10.1111/j.1468-0262.2004.00478.x
Publisher:
Econometric Society
Journal:
Econometrica More from this journal
Volume:
72
Issue:
1
Pages:
77 - 92
Publication date:
2004-01-01
DOI:
ISSN:
0012-9682
Language:
English
UUID:
uuid:1f78d122-907b-4861-aeee-88a8aa0e9dbb
Local pid:
oai:economics.ouls.ox.ac.uk:14793
Deposit date:
2011-08-16

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