Doğrusal olasılık ayarlamalı beklenti kuramı varsayımları altında birincil fiyat ihaleleri

Overbidding in rst-price sealed-bid auctions is a well-known result in theauction 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 probabilityweighting to explain overbidding, the probability weighting function (PWF)is needed to be underweighting all probabilities. Such a function is not inaccord with PWFs in the prospect theory literature as it suggests a specicfunction which satises certain properties. In this paper we investigate, towhat extent prospect theory is able to explain overbidding by using a linearPWF satisfying all of the axiomatic properties (Currim and Sarin, 1989).Moreover, we introduce a non-zero reference point, fully utilizing prospecttheory. Our results show that, subjective probability weighting alone is unableto explain overbidding. However, with the non-zero reference point assumption,we obtain partial overbidding.