Signalling in Auctions for Risk-Averse Bidders

Open Access
Authors
Publication date 14-10-2022
Journal PLoS ONE
Article number e0275709
Volume | Issue number 17 | 10
Number of pages 8
Organisations
  • Faculty of Economics and Business (FEB) - Amsterdam Business School Research Institute (ABS-RI)
  • Faculty of Economics and Business (FEB) - Amsterdam School of Economics Research Institute (ASE-RI)
Abstract We study risk-averse equilibrium bidding in first-price and second-price sealed-bid auctions where bidders have signalling concerns, i.e., they care about how the auction outcome is interpreted by an outside observer. We find that when the winner’s identity and her payment are revealed to the outside observer, risk aversion yields less aggressive bidding behaviour in the second-price sealed-bid auction than in the risk-neutral case. Our analysis explains various revenue ranking reversals relative to the risk-neutral equilibrium observed in a recent experiment by Bos (2021).
Document type Article
Language English
Published at https://doi.org/10.1371/journal.pone.0275709
Downloads
journal.pone.0275709 (1) (Final published version)
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