Roider, Andreas and Schmitz, Patrick W. (2012) Auctions with Anticipated Emotions: Overbidding, Underbidding, and Optimal Reserve Prices. SCANDINAVIAN JOURNAL OF ECONOMICS, 114 (3). pp. 808-830. ISSN 0347-0520,
Full text not available from this repository. (Request a copy)Abstract
The experimental literature has documented that there is overbidding in second-price auctions, regardless of the valuations of bidders. In contrast, in first-price auctions, there tends to be overbidding for large valuations, but underbidding for small valuations. We show that the experimental evidence can be rationalized by a simple extension of the standard auction model, where bidders anticipate (constant) positive or negative emotions caused by the mere fact of winning or losing. Even if the emotional (dis-)utilities are very small, the revenue-maximizing reserve price r* might be significantly different from the standard model. Moreover, r* decreases with the number of bidders.
| Item Type: | Article |
|---|---|
| Uncontrolled Keywords: | PRIVATE-VALUE AUCTIONS; AVERSION; DESIGN; REGRET; Auction theory; emotions; reserve prices |
| Subjects: | 300 Social sciences > 330 Economics |
| Divisions: | Business, Economics and Information Systems > Institut für Volkswirtschaftslehre und Ökonometrie > Lehrstuhl für Mikroökonomik (Prof. Dr. Andreas Roider) |
| Depositing User: | Dr. Gernot Deinzer |
| Date Deposited: | 26 May 2020 04:36 |
| Last Modified: | 26 May 2020 04:36 |
| URI: | https://pred.uni-regensburg.de/id/eprint/19415 |
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