Auctions with selective entry and risk averse bidders: theory and evidence

• 成果类型: Article
• 署名作者: Li, Tong; Lu, Jingfeng; Zhao, Li
• 署名单位: Vanderbilt University; National University of Singapore; Shanghai Jiao Tong University
• 刊物名称: RAND JOURNAL OF ECONOMICS
• ISSN/ISSBN: 0741-6261
• DOI: 10.1111/1756-2171.12096
• 发表日期: 2015
• 页码: 524-545
• 关键词: service timber sales; sealed-bid auctions; 1st-price auctions; procurement auctions; endogenous entry; affiliation; equilibrium; INFORMATION; models; identification

摘要

We study auctions with selective entry and risk averse bidders. Our model accounts for risk averse bidders' endogenous participation decision and thus encompasses the existing entry models. We establish entry and bidding equilibrium in first-price auction and ascending auction mechanisms and show that bidders' entry behavior differs between these two mechanisms with different forms of risk aversion. Our approach provides testable implications of risk aversion in terms of entry behavior. We analyze a timber auction data set and propose a simple test for the form of bidders' risk aversion based on our model implications.