ROBUSTNESS OF BIDDER PREFERENCES AMONG AUCTION INSTITUTIONS

Radosveta Ivanova‐stenzel and Tim Salmon
Authors registered in the RePEc Author Service: Radosveta Ivanova-Stenzel

Economic Inquiry, 2008, vol. 46, issue 3, 355-368

Abstract: In previous work, we found that bidders strongly prefer the ascending to the first‐price sealed‐bid auction on a ceteris paribus basis, but perhaps surprisingly, they are not willing to pay up to an entry price for the ascending auction that would equalize the profits. Risk aversion was proposed as an explanation. In this study, we examine two alternative explanations for the observed behavior: loss aversion and aversion to the dynamic bidding process. We find that neither alternative explanation can account for bidders’ auction choice behavior, leaving risk aversion as the only unfalsified hypothesis. (JEL C91, D44)

Date: 2008
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