The Impact of Participant’s Risk Attitude on Auctions Results: An Experimental Approach to Electricity Markets

Dresden University of Technology Electricity Market Working Paper No. WP-EM-22a

12 Pages Posted: 14 Oct 2009

See all articles by Friedrich Kunz

Friedrich Kunz

German Institute for Economic Research (DIW Berlin)

Michael Baumgärtner

Dresden University of Technology - Faculty of Economics and Business Management

Hans-Christian Seeliger

Dresden University of Technology - Faculty of Economics and Business Management

Linda Stolze

Dresden University of Technology - Faculty of Economics and Business Management

Florian Leuthold

Dresden University of Technology - Faculty of Economics and Business Management

Date Written: October 14, 2009

Abstract

We analyze the impact of the risk attitude of participating subjects in both single-sided uniform and pay-as-bid auctions using an experimental approach. The experiments are conducted in a stable demand environment with homogeneous groups, each consisting of five participants that exhibit either complete risk seeking or complete risk aversion. The results show that risk attitudes significantly affect the outcome of uniform auctions. We also note that our results differ substantially from other literature on experimental economics. We conclude that it is important to consider participants’ risk attitudes especially when conducting experiments with small groups.

Keywords: Electricity auctions, Experimental economics, Risk attitude

JEL Classification: C90, L94

Suggested Citation

Kunz, Friedrich and Baumgärtner, Michael and Seeliger, Hans-Christian and Stolze, Linda and Leuthold, Florian U., The Impact of Participant’s Risk Attitude on Auctions Results: An Experimental Approach to Electricity Markets (October 14, 2009). Dresden University of Technology Electricity Market Working Paper No. WP-EM-22a, Available at SSRN: https://ssrn.com/abstract=1488834 or http://dx.doi.org/10.2139/ssrn.1488834

Friedrich Kunz (Contact Author)

German Institute for Economic Research (DIW Berlin) ( email )

Mohrenstraße 58
Berlin, 10117
Germany

Michael Baumgärtner

Dresden University of Technology - Faculty of Economics and Business Management ( email )

Mommsenstrasse 13
Dresden, D-01062
Germany

Hans-Christian Seeliger

Dresden University of Technology - Faculty of Economics and Business Management ( email )

Mommsenstrasse 13
Dresden, D-01062
Germany

Linda Stolze

Dresden University of Technology - Faculty of Economics and Business Management ( email )

Mommsenstrasse 13
Dresden, D-01062
Germany

Florian U. Leuthold

Dresden University of Technology - Faculty of Economics and Business Management ( email )

Mommsenstrasse 13
Dresden, D-01062
Germany

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
28
Abstract Views
1,030
PlumX Metrics