Expectations-Based Loss Aversion in Auctions with Interdependent Values: Extensive vs. Intensive Risk

References

• Abeler J, Falk A, Goette L, Huffman D (2011) Reference points and effort provision. Amer. Econom. Rev. 101(2):470–492.Crossref, Google Scholar
• Banerji A, Gupta N (2014) Detection, identification and estimation of loss aversion: Evidence from an auction experiment. Amer. Econom. J. Microeconom. 6(1):91–133.Crossref, Google Scholar
• Belica M, Ehrhart KM (2014) Reference-dependent Bayesian games. Working paper, Karlsruhe Institute of Technology (KIT), Karlsruhe, Germany.Google Scholar
• Benkert J (2017) Bilateral trade with loss-averse agents. Working paper, University of Zurich, Zurich, Switzerland.Google Scholar
• Bulow J, Klemperer P (2002) Prices and the winner’s curse. RAND J. Econom. 33(1):1–21.Crossref, Google Scholar
• Cerreia-Vioglio S, Maccheroni F, Marinacci M (2017) Stochastic dominance analysis without the independence axiom. Management Sci. 63(4):1097–1109.Link, Google Scholar
• Crawford V, Iriberri N (2007) Level-k auctions: Can a nonequilibrium model of strategic thinking explain the winner’s curse and overbidding in private-value auctions? Econometrica 75(6):1721–1770.Crossref, Google Scholar
• Crawford V, Meng JJ (2011) New York City cab drivers’ labor supply revisited: Reference-dependent preferences with rational-expectations targets for hours and income. Amer. Econom. Rev. 101(5):1912–1932.Crossref, Google Scholar
• Daido K, Murooka T (2016) Team incentives and reference-dependent preferences. J. Econom. Management Strategy 25(4):958–989.Crossref, Google Scholar
• Dato S, Grunewald A, Müller D (2018) Expectation-based loss aversion and rank order tournaments. Econom. Theory 66(4):901–928.Crossref, Google Scholar
• Dato S, Grunewald A, Müller D, Strack P (2017) Expectation-based loss aversion and strategic interaction. Games Econom. Behav. 104(July):681–705.Crossref, Google Scholar
• Eeckhoudt L, Gollier C, Schlesinger H (1996) Changes in background risk and risk taking behavior. Econometrica 64(3):683–689.Crossref, Google Scholar
• Ehrhart KM, Ott M (2017) Reference-dependent bidding in dynamic auctions. Working paper, Karlsruhe Institute of Technology (KIT), Karlsruhe, Germany.Google Scholar
• Eisenhuth R (2019) Reference dependent mechanism design. Econom. Theory Bull. 7(1):77–103.Crossref, Google Scholar
• Eisenhuth R, Grunewald M (2018) Auctions with loss averse bidders. Internat. J. Econom. Theory, ePub ahead of print October 11, https://doi.org/10.1111/ijet.12189.Crossref, Google Scholar
• Eliaz K, Spiegler R (2015) X-games. Games Econom. Behav. 89(C):93–100.Crossref, Google Scholar
• Ericson Marzilli KM, Fuster A (2011) Expectations as endowments: Evidence on reference-dependent preferences from exchange and valuation experiments. Quart. J. Econom. 126(4):1879–1907.Crossref, Google Scholar
• Eső P, White L (2004) Precautionary bidding in auctions. Econometrica 72(1):77–92.Crossref, Google Scholar
• Eyster E, Rabin M (2005) Cursed equilibrium. Econometrica 73(5):1623–1672.Crossref, Google Scholar
• Fu Q, Wu Z, Lyu Y, Zhang Y (2019) Expectation-based loss aversion in contests. Working paper, National University of Singapore, Singapore.Google Scholar
• Genesove D, Mayer C (2001) Loss aversion and seller behavior: Evidence from the housing market. Quart. J. Econom. 116(4):1233–1260.Crossref, Google Scholar
• Gill D, Prowse V (2012) A structural analysis of disappointment aversion in a real effort competition. Amer. Econom. Rev. 102(1):469–503.Crossref, Google Scholar
• Gill D, Stone R (2010) Fairness and desert in tournaments. Games Econom. Behav. 69(2):346–364.Crossref, Google Scholar
• Gül Mermer A (2017) Effort provision and optimal prize structure in all-pay contests with loss-averse players. Working paper, University of Manchester, Manchester, UK.Google Scholar
• Heidhues P, Kőszegi B (2008) Competition and price variation when consumers are loss averse. Amer. Econom. Rev. 98(4):1245–1268.Crossref, Google Scholar
• Heidhues P, Kőszegi B (2014) Regular prices and sales. Theoret. Econom. 9(1):217–251.Crossref, Google Scholar
• Herweg F, Mierendorff K (2013) Uncertain demand, consumer loss aversion, and flat-rate tariffs. J. Eur. Econom. Assoc. 11(2):399–432.Crossref, Google Scholar
• Herweg F, Karle H, Müller D (2018) Incomplete contracting, renegotiation, and expectation-based loss aversion. J. Econom. Behav. Organ. 145(January):176–201.Crossref, Google Scholar
• Herweg F, Müller D, Weinschenk P (2010) Binary payment schemes: Moral hazard and loss aversion. Amer. Econom. Rev. 100(5):2451–2477.Crossref, Google Scholar
• Holt C, Sherman R (1994) The loser’s curse. Amer. Econom. Rev. 84(3):642–652.Google Scholar
• Kagel J, Levin D (1986) The winner’s curse and public information in common value auctions. Amer. Econom. Rev. 76(5):894–920.Google Scholar
• Kahneman D, Tversky A (1979) Prospect theory: An analysis of decision under risk. Econometrica 47(2):263–291.Crossref, Google Scholar
• Kahneman D, Knetsch JL, Thaler R (1990) Experimental tests of the endowment effect and the coase theorem. J. Political Econom. 98(6):1325–1348.Crossref, Google Scholar
• Kahneman D, Knetsch JL, Thaler R (1991) Anomalies: The endowment effect, loss aversion, and status quo bias. J. Econom. Perspect. 5(1):193–206.Crossref, Google Scholar
• Karle H, Peitz M (2014) Competition under consumer loss aversion. RAND J. Econom. 45(1):1–31.Crossref, Google Scholar
• Karle H, Peitz M (2017) De-targeting: Advertising an assortment of products to loss-averse consumers. Eur. Econom. Rev. 95:103–124.Crossref, Google Scholar
• Karle H, Schumacher H (2017) Advertising and attachment: Exploiting loss aversion through pre-purchase information. RAND J. Econom. 48(4):927–948.Crossref, Google Scholar
• Karle H, Kirchsteiger G, Peitz M (2015) Loss aversion and consumption choice: Theory and experimental evidence. Amer. Econom. J. Microeconom. 7(2):101–120.Crossref, Google Scholar
• Kimball M (1990) Precautionary saving in the small and in the large. Econometrica 58(1):53–73.Crossref, Google Scholar
• Klemperer P (1998) Auctions with almost common values: The ‘wallet game’ and its applications. Eur. Econom. Rev. 42(3–5):757–769.Crossref, Google Scholar
• Kocher M, Pahlke J, Trautmann T (2015) An experimental study of precautionary bidding. Eur. Econom. Rev. 78(August):27–38.Crossref, Google Scholar
• Kőszegi B, Rabin M (2006) A model of reference-dependent preferences. Quart. J. Econom. 121(4):1133–1165.Crossref, Google Scholar
• Kőszegi B, Rabin M (2007) Reference-dependent risk attitudes. Amer. Econom. Rev. 97(4):1047–1073.Crossref, Google Scholar
• Kőszegi B, Rabin M (2009) Reference-dependent consumption plans. Amer. Econom. Rev. 99(3):909–936.Crossref, Google Scholar
• Lange A, Ratan A (2010) Multi-dimensional reference-dependent preferences in sealed-bid auctions: How (most) laboratory experiments differ from the field. Games Econom. Behav. 68(2):634–645.Crossref, Google Scholar
• Macera R (2018) Intertemporal incentives under loss aversion. J. Econom. Theory 178(November):551–594.Crossref, Google Scholar
• Matthews S (1983) Selling to risk averse buyers with unobservable tastes. J. Econom. Theory 30(2):370–400.Crossref, Google Scholar
• Masatlioglu Y, Raymond C (2016) A behavioral analysis of stochastic reference dependence. Amer. Econom. Rev. 106(9):2760–2782.Crossref, Google Scholar
• Meng JJ, Weng X (2017) Can prospect theory explain the disposition effect? A new perspective on reference points. Management Sci. 64(7):2973–3468.Google Scholar
• Menicucci D (2004) Risk aversion in first price auctions with common values. Econom. Lett. 85(1):43–46.Crossref, Google Scholar
• Milgrom P, Shannon C (1994) Monotone comparative statics. Econometrica 62(1):157–180.Crossref, Google Scholar
• Milgrom P, Weber R (1982) A theory of auctions and competitive bidding. Econometrica 50(5):1089–1112.Crossref, Google Scholar
• Murto P, Valimäki J (2015) Large common value auctions with risk averse bidders. Games Econom. Behav. 91(May):60–74.Crossref, Google Scholar
• Novemsky N, Kahneman D (2005) The boundaries of loss aversion. J. Marketing Res. 42(2):119–128.Crossref, Google Scholar
• Odean T (1998) Are investors reluctant to realize their losses? J. Finance 53(5):1775–1798.Crossref, Google Scholar
• Pagel M (2016) Expectations-based reference-dependent preferences and asset pricing. J. Eur. Econom. Assoc. 14(2):468–514.Crossref, Google Scholar
• Pagel M (2017) Expectations-based reference-dependent life-cycle consumption. Rev. Econom. Stud. 84(2):885–934.Google Scholar
• Pesendorfer W, Swinkels J (1997) The loser’s curse and information aggregation in common value auctions. Econometrica 65(6):1247–1281.Crossref, Google Scholar
• Rosato A (2016) Selling substitute goods to loss-averse consumers: Limited availability, bargains and rip-offs. RAND J. Econom. 47(3):709–733.Crossref, Google Scholar
• Rosato A (2017) Sequential negotiations with loss-averse buyers. Eur. Econom. Rev. 91(January):290–304.Crossref, Google Scholar
• Rosato A (2019) Loss aversion in sequential auctions: Endogenous interdependence, informational externalities and the afternoon effect. Working paper, University of Technology, Sydney, Australia.Google Scholar
• Rosato A, Tymula A (2019) Loss aversion and competition in Vickrey auctions: Money ain’t no good. Games Econom. Behav. 115(May):188–208.Crossref, Google Scholar
• Shalev J (2000) Loss aversion equilibrium. Internat. J. Game Theory 29(2):269–287.Crossref, Google Scholar
• Smith A (2019) Lagged beliefs and reference-dependent utility. J. Econom. Behav. Organ. 167(November):331–340.Google Scholar
• Spiegler R (2012) Monopoly pricing when consumers are antagonized by unexpected price increases: A “cover version” of the Heidhues–Kőszegi–Rabin model. Econom. Theory 51(3):695–711.Crossref, Google Scholar
• Tversky A, Kahneman D (1991) Loss aversion in riskless choice: A reference-dependent model. Quart. J. Econom. 106(4):1039–1061.Crossref, Google Scholar
• von Wangenheim J (2017) English vs. Vickrey auctions with loss averse bidders. Working paper, Free University of Berlin, Berlin.Google Scholar