Download or read book Does Risk Aversion Cause Overbidding? New Experimental Evidence from First Price Sealed Bid Auctions written by Sascha Füllbrunn and published by . This book was released on 2019 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Bidding above the risk-neutral Nash Equilibrium in first price sealed bid auctions has traditionally been ascribed to risk aversion. Recent studies, however, offer other explanations and argue that risk aversion plays no or only a minor role. So far, no study has shown a causal relationship between risk aversion and overbidding. We implement a new experimental design which directly tests this relationship by controlling for the distribution of risk attitudes in auction markets. We find a causal relationship between our measure of risk aversion and overbidding. This result is robust to learning effects and the inclusion of feedback.