Loss aversion in sequential auctions

• 成果类型: Article
• 署名作者: Rosato, Antonio
• 署名单位: University of Queensland
• 刊物名称: THEORETICAL ECONOMICS
• ISSN/ISSBN: 1933-6837
• DOI: 10.3982/TE4096
• 发表日期: 2023-05-01
• 页码: 561-596
• 关键词: Loss aversion; sequential auctions; afternoon effect; D03; D44; D81; D82

摘要

I analyze sequential auctions with expectations-based loss-averse bidders who have independent private values and unit demand. Equilibrium bids are history dependent and subject to a discouragement effect: the higher is the winning bid in the current round, the less aggressive are the bids of the remaining bidders in the next round. Moreover, because they experience a loss in each round in which they fail to obtain an object, bidders are willing to pay a premium to win sooner rather than later. This desire to win earlier leads prices to decline in equilibrium. I also show how various disclosure policies regarding the outcome of earlier auctions affect equilibrium bids, and that sequential and simultaneous auctions are neither bidder-payoff equivalent nor revenue equivalent.