Theory and Individual Behavior of First-Price Auctions.

B-Tier
Journal: Journal of Risk and Uncertainty
Year: 1988
Volume: 1
Issue: 1
Pages: 61-99

Score contribution per author:

0.670 = (α=2.01 / 3 authors) × 1.0x B-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

First-price auction theory is extended to the case of heterogeneous bidders characterized by M-parameter log-concave utility functions. This model, and its specific two-parameter constant relative risk averse special case, is generally supported by the results of 47 experiments. The one-parameter special case that comprises most of the theoretical literature is not supported by the experiments. One anomaly for the two-parameter model is that too many of the subjects exhibit positive (or negative) intercepts in their linear estimated bid functions. Accordingly, we develop a specific three-parameter model, which introduces a utility of winning, and a threshold utility of surplus. The new model, tested directly by introducing lump-sum payments or charges for winning, is not falsified by the new experiments. Copyright 1988 by Kluwer Academic Publishers

Technical Details

RePEc Handle
repec:kap:jrisku:v:1:y:1988:i:1:p:61-99
Journal Field
Theory
Author Count
3
Added to Database
2026-01-25