Robustness of Bidder Preferences Among Auction Institutions

14 Pages Posted: 8 Sep 2008

See all articles by Radosveta Ivanova-Stenzel

Radosveta Ivanova-Stenzel

Technische Universität Berlin (TU Berlin)

Timothy C. Salmon

Southern Methodist University (SMU)

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 Classification: C91, D44

Suggested Citation

Ivanova-Stenzel, Radosveta and Salmon, Timothy C., Robustness of Bidder Preferences Among Auction Institutions. Economic Inquiry, Vol. 46, No. 3, pp. 355-368, July 2008. Available at SSRN: https://ssrn.com/abstract=1263071 or http://dx.doi.org/10.1111/j.1465-7295.2007.00111.x

Radosveta Ivanova-Stenzel (Contact Author)

Technische Universität Berlin (TU Berlin) ( email )

Straße des 17. Juni 135
Berlin, 10623
Germany

Timothy C. Salmon

Southern Methodist University (SMU)

6212 Bishop Blvd.
Dallas, TX 75275
United States

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