Risk averse bidders drive prices down in sequential auctions, impacting revenue.
The article analyzes how bidders in sequential auctions with different risk preferences affect prices. They found that when bidders are risk averse, prices tend to decrease over time, while risk preferring bidders lead to increasing prices. The study shows that in Dutch auctions, prices are higher on average compared to Vickrey auctions. This is because bidders with background risk tend to be more cautious in their bidding strategies.