#1985-014A "Risk Aversion, Risk Sharing, and Joint Bidding: A Study of Outer Continental Shelf Petroleum Auctions"
by Steven W. Millsaps, and Mack Ott


The bidding decision by firms in OCS petroleum auctions is modeled as an application of the Arrow-Pratt theory of risk aversion. This theory is apt since OCS leases are innately risky investments: during 1954-1969, 77percent of the Gulf of Mexico leases were unprofitable, while the average bonus (price) was ,228,000. More...

PUBLISHED: Land Economics, November 1985, 61(4), pp. 372-86