Auction Theory from an All-Pay View: Buying Binary Lotteries

24 Pages Posted: 26 Jan 2001

See all articles by Wolfgang Leininger

Wolfgang Leininger

University of Dortmund - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

Date Written: December 2000

Abstract

An auction is viewed as a process that in equilibrium generates a binary lottery for each bidder, which the bidder "buys" with his bid. This view allows for a simple way to consistently assess differences in bidding behavior over different bidders and different auctions. E.g. all auctions covered by the Revenue Equivalence Theorem are shown to generate lotteries with identical probabilities, but different pay-offs. It is then argued, that understanding of (experimentally observed) bidding behavior in auctions is enhanced by drawing on the large literature on choice behavior over lotteries.

JEL Classification: C7

Suggested Citation

Leininger, Wolfgang, Auction Theory from an All-Pay View: Buying Binary Lotteries (December 2000). Available at SSRN: https://ssrn.com/abstract=257794

Wolfgang Leininger (Contact Author)

University of Dortmund - Department of Economics ( email )

D-44221 Dortmund
Germany
+49 231 755 3297 (Phone)
+49 231 755 3027 (Fax)

CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

Poschinger Str. 5
Munich, DE-81679
Germany

HOME PAGE: http://www.CESifo.de

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