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Auction Design with Loss Averse Bidders: The Optimality of All Pay Mechanisms

Eisenhuth, Roland (2010): Auction Design with Loss Averse Bidders: The Optimality of All Pay Mechanisms.

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Abstract

Auctioneers who have an indivisible object for sale and believe that bidders are risk neutral can find the recipe for an optimal auction in Myerson (1981); auctioneers who believe that bidders are loss averse can find it here: An optimal auction is an all pay auction with minimum bid, and any optimal mechanism is all pay.

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