Dutch vs. first-price auctions with expectations-based loss-averse bidders

• 成果类型: Article
• 署名作者: Balzer, Benjamin; Rosato, Antonio; von Wangenheim, Jonas
• 署名单位: University of Technology Sydney; University of Queensland; University of Naples Federico II; University of Bonn
• 刊物名称: JOURNAL OF ECONOMIC THEORY
• ISSN/ISSBN: 0022-0531
• DOI: 10.1016/j.jet.2022.105545
• 发表日期: 2022
• 关键词: Loss aversion; Dutch auctions; revenue equivalence; Personal equilibrium

摘要

We study Dutch and first-price auctions with expectations-based loss-averse bidders and show that the strategic equivalence between these formats no longer holds. Intuitively, as the Dutch auction unfolds, a bidder becomes more optimistic about her chances of winning; this stronger attachment effect pushes her to bid more aggressively than in the first-price auction. Thus, Dutch auctions raise more revenue than first-price ones. Indeed, the Dutch auction raises the most revenue among standard auction formats. Our results imply that dynamic mechanisms that make bidders more optimistic raise more revenue, thereby rationalizing the use of descending-price mechanisms by sellers in the field.(c) 2022 Elsevier Inc. All rights reserved.