by Ilya Voytov
Abstract
Auction theory economists have shown that auctions can be structured to maximize
the expected revenue to the seller. In this thesis, I show that they can also be
optimized to minimize the sellers’ risk through an understanding of the driving factors
behind seller’s auction price risk. I derive a general form equation for auction price
variance, and discuss how changes in the number of bidders and the type of bidders
affect the sellers’ auction risk. An empirical component of this paper takes data from
auction sales of Australian Aboriginal art and uses observed price variance to make
deductions about the underlying types of participating bidders.
Professor Neil De Marchi, Faculty Advisor
JEL Codes: C57, D44, D53, N27,
