All-Pay Auctions with Weakly Risk-Averse Buyers

37 Pages Posted: 19 Feb 2004

See all articles by Gadi Fibich

Gadi Fibich

Tel Aviv University - School of Mathematical Sciences

Arieh Gavious

Ono Academic College; Ben-Gurion University

Aner Sela

Ben-Gurion University of the Negev - Department of Economics; Centre for Economic Policy Research (CEPR)

Date Written: January 2004

Abstract

We use perturbation analysis to study independent private-value all-pay auctions with weakly risk-averse buyers. We show that under weak risk aversion: 1) Buyers with low values bid lower and buyers with high values bid higher than they would bid in the risk neutral case. 2) Buyers with low values bid lower and buyers with high values bid higher than they would bid in a first-price auction. 3) Buyers' expected utilities in an all-pay auction are lower than in a first-price auction. 4) The seller's expected payoff in an all-pay auction may be either higher or lower than in the risk neutral case. 5) The seller's expected payoff in an all-pay auction may be either higher or lower than in a first-price auction.

Keywords: Private-value auctions, Risk aversion, Perturbation analysis

JEL Classification: D44, D72, D82

Suggested Citation

Fibich, Gadi and Gavious, Arieh and Sela, Aner, All-Pay Auctions with Weakly Risk-Averse Buyers (January 2004). Available at SSRN: https://ssrn.com/abstract=501822 or http://dx.doi.org/10.2139/ssrn.501822

Gadi Fibich (Contact Author)

Tel Aviv University - School of Mathematical Sciences ( email )

Tel Aviv 69978
Israel

Arieh Gavious

Ono Academic College ( email )

Kyriat Ono
Israel

Ben-Gurion University ( email )

Beer-Sheva 84105
Israel

Aner Sela

Ben-Gurion University of the Negev - Department of Economics ( email )

Beer-Sheva 84105
Israel
+972 8 647 2309 (Phone)
+972 8 647 2941 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
116
Abstract Views
1,212
rank
296,806
PlumX Metrics