“…NPC bidders fail to recognize the flexibility of non-realization embedded in the auctioned contracts, while OBC bidders factor it in. Existing litera-ture provides evidence for the existence of both bidder types [e.g., Paddock et al, 1988, Quigg, 1993, Graham and Harvey, 2001, Moel and Tufano, 2002, Cunningham, 2006, Bulan et al, 2009, Denison et al, 2012, Wang et al, 2012, Kellogg, 2014, Holst et al, 2016, Ihli et al, 2018 and Matthäus et al [2019] investigates the matter empirically for the case of renewable electricity support auctions in the United Kingdom and Germany. The empirical approach elicits a share of 35 % NPC bidders in the German auction for o↵-shore wind support, which we employ in the present model as well.…”