Premium auctions and risk preferences

• 成果类型: Article
• 署名作者: Hu, Audrey; Offerman, Theo; Zou, Liang
• 署名单位: University of Amsterdam; Ruprecht Karls University Heidelberg; University of Amsterdam
• 刊物名称: JOURNAL OF ECONOMIC THEORY
• ISSN/ISSBN: 0022-0531
• DOI: 10.1016/j.jet.2011.10.005
• 发表日期: 2011
• 页码: 2420-2439
• 关键词: Premium auction; English auction; risk preference; Net-premium effect

摘要

In a premium auction, the seller offers some payback, called premium, to a set of high bidders at the end of the auction. This paper investigates how the performance of such premium tactics is related to the bidders' risk preferences. We analyze a two-stage English premium auction model with symmetric interdependent values, in which the bidders may be risk averse or risk preferring. Upon establishing the existence and uniqueness of a symmetric equilibrium, we show that the premium causes the expected revenue to increase in the bidders' risk tolerance. A net-premium effect is key to this result. (C) 2011 Elsevier Inc. All rights reserved.