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Auction Design with Loss Averse Bidders: The Optimality of All Pay Mechanisms

Roland Eisenhuth

MPRA Paper from University Library of Munich, Germany

Abstract: Auctioneers who have an indivisible object for sale and believe that bidders are risk neutral can find the recipe for an optimal auction in Myerson (1981); auctioneers who believe that bidders are loss averse can find it here: An optimal auction is an all pay auction with minimum bid, and any optimal mechanism is all pay.

Keywords: Auctions; Loss Aversion; All Pay Mechanisms; Mechanism Design; Revenue Equivalence (search for similar items in EconPapers)
JEL-codes: C70 D03 D44 D81 D86 (search for similar items in EconPapers)
Date: 2010-06-16
New Economics Papers: this item is included in nep-cta, nep-exp and nep-upt
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