Star-Shaped Probability Weighting Functions and Overbidding in First-Price Auctions

Olivier Armantier and Nicolas Treich

No 09-024, TSE Working Papers from Toulouse School of Economics (TSE)

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)
JEL-codes: C70 C92 D44 D81 (search for similar items in EconPapers)
Date: 2009-03
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Citations: View citations in EconPapers (12)

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Journal Article: Star-shaped probability weighting functions and overbidding in first-price auctions (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:tse:wpaper:22143

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