| 1. |
- Kocher, Martin G., et al.
(författare)
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An experimental study of precautionary bidding
- 2015
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Ingår i: European Economic Review. - : Elsevier BV. - 0014-2921. ; 78, s. 27-38
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Tidskriftsartikel (refereegranskat)abstract
- Auctions often involve goods exhibiting a common-knowledge ex-post risk. In such auctions, precautionary bidding predicts that under expected utility, DARA bidders reduce their bids by more than the appropriate risk premium. Because the degree of riskiness of an auctioned good and bidders' levels of risk aversion are difficult to observe in field settings, we conduct experimental auctions that allow us to identify the precautionary premium directly. We find strong evidence for precautionary bidding. The effect is robust to changes in experimental design features. Our experiment provides the first empirical demonstration of precautionary motives in a strategic setting. (C) 2015 Elsevier B.V. All rights reserved.
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| 2. |
- Kocher, Martin G., et al.
(författare)
-
Tempus Fugit: Time Pressure in Risky Decisions
- 2013
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Ingår i: Management Science. - : Institute for Operations Research and the Management Sciences (INFORMS). - 0025-1909 .- 1526-5501. ; 59:10, s. 2380-2391
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Tidskriftsartikel (refereegranskat)abstract
- We study the effects of time pressure on risky decisions for pure gain prospects, pure loss prospects, and mixed prospects involving both gains and losses. In two experiments we find that time pressure has no effect on risk attitudes for gains, but increases risk aversion for losses. For mixed prospects, subjects become simultaneously more loss averse and more gain seeking under time pressure, depending on the framing of the prospects. The results suggest the importance of aspiration levels, and thus the overall probability to break even, under time pressure. We discuss the implications of our findings for decision-making situations that involve time pressure.
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