Back to Search
Start Over
Spite vs. risk: explaining overbidding
- Publication Year :
- 2019
- Publisher :
- Munich: Center for Economic Studies and ifo Institute (CESifo), 2019.
-
Abstract
- In this paper we use an experiment to compare a theory of risk aversion and a theory of spite as an explanation for overbidding in auctions. As a workhorse we use the second-price all-pay and the first-price winner-pay auction. Both risk and spite can be used to rationalize deviations from risk neutral equilibrium bids in auctions. We exploit that equilibrium predictions in the second-price all-pay auctions for spiteful preferences are different than those for risk averse preferences. Indeed, we find that spite is a more convincing explanation for bidding behavior for the second-price all-pay auction. Not only can spite rationalize observed bids, also our measure for spite is consistent with observed bids.
Details
- Language :
- English
- Database :
- OpenAIRE
- Accession number :
- edsair.od......1687..047ad492e3692250a47655407fa4aa12