Auctions with resale and risk aversion

This paper provides necessary conditions of an equilibrium for a first-price auction with resale when one of the two bidders participating in the auction is risk averse and the other bidder is risk neutral. We show that the risk averse bidder bids more aggressively than the risk neutral bidder. If the probability distributions are identical, then the risk averse bidder wins the auction more often than the risk neutral bidder. We also construct an example to show that, if the probability distributions are non-identical, then “bid symmetrization” may hold.