Premium auctions and risk preferences |
| |
Authors: | Audrey Hu Theo Offerman Liang Zou |
| |
Institution: | aAlfred-Weber Institute, University of Heidelberg, DE-69115 Heidelberg, Germany;bUniversity of Amsterdam/CREED, 1018 WB Amsterdam, The Netherlands;cUniversity of Amsterdam/ABS, 1018 WB Amsterdam, The Netherlands |
| |
Abstract: | In a premium auction, the seller offers some “payback”, called premium, to a set of high bidders at the end of the auction. This paper investigates how the performance of such premium tactics is related to the bidders? risk preferences. We analyze a two-stage English premium auction model with symmetric interdependent values, in which the bidders may be risk averse or risk preferring. Upon establishing the existence and uniqueness of a symmetric equilibrium, we show that the premium causes the expected revenue to increase in the bidders? risk tolerance. A “net-premium effect” is key to this result. |
| |
Keywords: | JEL classification: D44 |
本文献已被 ScienceDirect 等数据库收录! |
|