Template-Type: ReDIF-Paper 1.0
Title: English Versus Vickrey Auctions With Loss-Averse Bidders
Author-Name: Jonas von Wangenheim
Author-Email: jwangenheim@uni-bonn.de

Classification-JEL: D03, D44
Keywords: Vickrey auction, English auction, Japanese auction, expectationsbased loss aversion, revenue equivalence, dynamic loss aversion, personal equilibrium

Abstract: Evidence suggests that people evaluate outcomes relative to expectations.
I analyze this expectations-based loss aversion à la Köszegi and
Rabin in the context of dynamic and static auctions, where the reference
point is given by the (endogenous) equilibrium outcome. If agents update
their reference point during the auction, the arrival of information crucially
affects equilibrium behavior. Consequently, I show that - even with
independent private values - the Vickrey auction yields strictly higher revenue
than the (ascending clock) English auction, violating the well-known
revenue equivalence.

Note: 
Length: 65
Creation-Date: 2021-07
Revision-Date: 
File-URL: https://www.crctr224.de/research/discussion-papers/archive/dp313
File-Format: application/pdf
Handle: RePEc:bon:boncrc:CRCTR224_2021_313