Star-shaped probability weighting functions and overbidding in first-price auctions

Olivier Armantier and Nicolas Treich

Economics Letters, 2009, vol. 104, issue 2, pages 83-85

Abstract: There 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.

Keywords: Probability; weighting; function; Auctions; Overbidding; Non-expected; utility; Risk; aversion (search for similar items in EconPapers)
Date: 2009

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Persistent link: http://EconPapers.repec.org/RePEc:eee:ecolet:v:104:y:2009:i:2:p:83-85

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