Payoff equivalence in sealed bid auctions and the dual theory of choice under risk

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4 Scopus citations

Abstract

This paper considers single item auctions in the private values framework, with buyers whose preferences satisfy the axioms of Yaari's [Econometrica 55 (1987) 95] dual theory of choice under risk. It is shown that when their valuations are independently distributed, risk averse buyers are indifferent among all the auctions contained in a large family of mechanisms that includes the standard auctions.

Original languageEnglish
Pages (from-to)231-237
Number of pages7
JournalEconomics Letters
Volume76
Issue number2
DOIs
StatePublished - 1 Jul 2002
Externally publishedYes

Keywords

  • Auctions
  • Non-expected utility
  • Risk aversion

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics

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