First price auctions under prospect theory with linear probability weighting

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buir.advisorKara, Tarık
dc.contributor.authorKeskin, Kerim
dc.date.accessioned2016-01-08T18:23:58Z
dc.date.available2016-01-08T18:23:58Z
dc.date.issued2011
dc.departmentDepartment of Economicsen_US
dc.descriptionAnkara : The Department of Economics, İhsan Doğramacı Bilkent University, 2011.en_US
dc.descriptionThesis (Master's) -- Bilkent University, 2011.en_US
dc.descriptionIncludes bibliographical references leaves 23-24.en_US
dc.description.abstractOverbidding in first-price sealed-bid auctions is a well-known result in the auction theory literature. For the possible reasons behind this phenomenon, economists provided many explanations; such as risk aversion, regret theory, and subjective probability weighting. However, for subjective probability weighting to explain overbidding, the probability weighting function (PWF) is needed to be underweighting all probabilities. Such a function is not in accord with PWFs in the prospect theory literature as it suggests a specific function which satisfies certain properties. In this paper we investigate, to what extent prospect theory is able to explain overbidding by using a linear PWF satisfying all of the axiomatic properties (Currim and Sarin, 1989). Moreover, we introduce a non-zero reference point, fully utilizing prospect theory. Our results show that, subjective probability weighting alone is unable to explain overbidding. However, with the non-zero reference point assumption, we obtain partial overbidding.en_US
dc.description.degreeM.A.en_US
dc.description.statementofresponsibilityKeskin, Kerimen_US
dc.format.extentvii, 32 leavesen_US
dc.identifier.urihttp://hdl.handle.net/11693/15745
dc.language.isoEnglishen_US
dc.publisherBilkent Universityen_US
dc.rightsinfo:eu-repo/semantics/openAccessen_US
dc.subjectFirst-price auctionsen_US
dc.subjectSubjective probability weightingen_US
dc.subjectProspect theoryen_US
dc.subjectReference pointen_US
dc.subjectOverbiddingen_US
dc.subject.lccHF5476 .K37 2011en_US
dc.subject.lcshAuctions--Mathematical models.en_US
dc.subject.lcshGame theory.en_US
dc.subject.lcshPrices--Mathematical models.en_US
dc.titleFirst price auctions under prospect theory with linear probability weightingen_US
dc.typeThesisen_US
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