On Risk Aversion in Auctions
Fuente:
arXiv
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| Auteurs principaux: | , |
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| Format: | Preprint |
| Publié: |
2026
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| _version_ | 1866910047980748800 |
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| author | Pease, Marilyn Whitmeyer, Mark |
| author_facet | Pease, Marilyn Whitmeyer, Mark |
| contents | We provide a unifying way to analyze how risk aversion changes bidding in auctions by asking which bids become more attractive as bidders become more risk averse. In first-price auctions, under two payoff conditions--winning is never worse than the outside option, and winning with a low bid is preferable to winning only with a high bid--greater risk aversion makes high bids more appealing. In second-price auctions with a known outside option, bidding more increases risk exposure conditional on winning, so greater risk aversion favors lower bids. We show these bid-level forces translate into corresponding equilibrium comparative statics. |
| format | Preprint |
| id |
arxiv_https___arxiv_org_abs_2603_09683 |
| institution | arXiv |
| publishDate | 2026 |
| record_format | arxiv |
| spellingShingle | On Risk Aversion in Auctions Pease, Marilyn Whitmeyer, Mark Theoretical Economics We provide a unifying way to analyze how risk aversion changes bidding in auctions by asking which bids become more attractive as bidders become more risk averse. In first-price auctions, under two payoff conditions--winning is never worse than the outside option, and winning with a low bid is preferable to winning only with a high bid--greater risk aversion makes high bids more appealing. In second-price auctions with a known outside option, bidding more increases risk exposure conditional on winning, so greater risk aversion favors lower bids. We show these bid-level forces translate into corresponding equilibrium comparative statics. |
| title | On Risk Aversion in Auctions |
| topic | Theoretical Economics |
| url | https://arxiv.org/abs/2603.09683 |