IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/6102.html
   My bibliography  Save this paper

Revenue Comparisons for Auctions When Bidders Have Arbitrary Types

Author

Listed:
  • Che, Yeon-Koo
  • Gale, Ian

Abstract

This paper develops a methodology for characterizing expected revenue from auctions in which bidders' types come from an arbitrary distribution. In particular, types may be multidimensional, and there may be mass points in the distribution. One application extends existing revenue equivalence results. Another application shows that first-price auctions yield higher expected revenue than second-price auctions when bidders are risk averse and/or face financial constraints. This revenue ranking also extends to risk-averse bidders with general forms of non-expected utility preferences.

Suggested Citation

  • Che, Yeon-Koo & Gale, Ian, 2006. "Revenue Comparisons for Auctions When Bidders Have Arbitrary Types," MPRA Paper 6102, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:6102
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/6102/1/MPRA_paper_6102.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Jean-Pierre Benoît & Vijay Krishna, 2001. "Multiple-Object Auctions with Budget Constrained Bidders," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 68(1), pages 155-179.
    2. Yeon-Koo Che & Ian Gale, 1998. "Standard Auctions with Financially Constrained Bidders," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 65(1), pages 1-21.
    3. Hong Chew Soo & Hui Mao Mei, 1995. "A Schur Concave Characterization of Risk Aversion for Non-expected Utility Preferences," Journal of Economic Theory, Elsevier, vol. 67(2), pages 402-435, December.
    4. John Asker & Estelle Cantillon, 2004. "Equilibrium in Scoring Auctions," Working Papers 2004.148, Fondazione Eni Enrico Mattei.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Oleksii Birulin & Sergei Izmalkov, 2022. "On advance payments in tenders with budget constrained contractors," RAND Journal of Economics, RAND Corporation, vol. 53(4), pages 733-762, December.
    2. Baisa, Brian, 2017. "Auction design without quasilinear preferences," Theoretical Economics, Econometric Society, vol. 12(1), January.
    3. Bobkova, Nina, 2020. "Asymmetric budget constraints in a first-price auction," Journal of Economic Theory, Elsevier, vol. 186(C).
    4. Malueg, David A. & Orzach, Ram, 2009. "Revenue comparison in common-value auctions: Two examples," Economics Letters, Elsevier, vol. 105(2), pages 177-180, November.
    5. Tristan Gagnon-Bartsch & Marco Pagnozzi & Antonio Rosato, 2021. "Projection of Private Values in Auctions," American Economic Review, American Economic Association, vol. 111(10), pages 3256-3298, October.
    6. Lu, Jingfeng & Parreiras, Sérgio O., 2017. "Monotone equilibrium of two-bidder all-pay auctions Redux," Games and Economic Behavior, Elsevier, vol. 104(C), pages 78-91.
    7. John Asker & Estelle Cantillon, 2008. "Properties of scoring auctions," RAND Journal of Economics, RAND Corporation, vol. 39(1), pages 69-85, March.
    8. Maciej H. Kotowski & Fei Li, 2012. "On the Continuous Equilibria of Affiliated-Value, All-Pay Auctions with Private Budget Constraints, Second Version," PIER Working Paper Archive 13-043, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania, revised 05 Aug 2013.
    9. Chakraborty, Indranil, 2019. "Simultaneous vs. sequential auctions with risk averse bidders," Games and Economic Behavior, Elsevier, vol. 113(C), pages 209-222.
    10. Sano, Ryuji, 2023. "Post-auction investment by financially constrained bidders," Journal of Economic Theory, Elsevier, vol. 213(C).
    11. Kotowski, Maciej H. & Li, Fei, 2014. "On the continuous equilibria of affiliated-value, all-pay auctions with private budget constraints," Games and Economic Behavior, Elsevier, vol. 85(C), pages 84-108.
    12. Baisa, Brian, 2020. "Efficient multi-unit auctions for normal goods," Theoretical Economics, Econometric Society, vol. 15(1), January.
    13. Kotowski, Maciej H. & Li, Fei, 2014. "The war of attrition and the revelation of valuable information," Economics Letters, Elsevier, vol. 124(3), pages 420-423.
    14. Burkett, Justin, 2015. "Endogenous budget constraints in auctions," Journal of Economic Theory, Elsevier, vol. 158(PA), pages 1-20.
    15. Maciej H. Kotowski & Fei Li, 2012. "On the Continuous Equilibria of Affiliated-Value, All-Pay Auctions with Private Budget Constraints, Third Version," PIER Working Paper Archive 14-001, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania, revised 10 Jan 2014.
    16. Monteiro, Paulo Klinger & Svaiter, Benar Fux, 2010. "Optimal auction with a general distribution: Virtual valuation without densities," Journal of Mathematical Economics, Elsevier, vol. 46(1), pages 21-31, January.
    17. Baisa, Brian, 2016. "Overbidding and inefficiencies in multi-unit Vickrey auctions for normal goods," Games and Economic Behavior, Elsevier, vol. 99(C), pages 23-35.
    18. Kotowski, Maciej H., 2020. "First-price auctions with budget constraints," Theoretical Economics, Econometric Society, vol. 15(1), January.
    19. Itzhak Rasooly & Carlos Gavidia-Calderon, 2020. "The importance of being discrete: on the inaccuracy of continuous approximations in auction theory," Papers 2006.03016, arXiv.org, revised Aug 2022.
    20. Vasserman, Shoshana & Watt, Mitchell, 2021. "Risk aversion and auction design: Theoretical and empirical evidence," International Journal of Industrial Organization, Elsevier, vol. 79(C).
    21. Che, Yeon-Koo & Gale, Ian & Kim, Jinwoo, 2013. "Efficient assignment mechanisms for liquidity-constrained agents," International Journal of Industrial Organization, Elsevier, vol. 31(5), pages 659-665.
    22. Rene Kirkegaard, 2011. "Ranking Asymmetric Auctions using the Dispersive Order," Working Papers 1101, University of Guelph, Department of Economics and Finance.
    23. Guillaume Pommey, 2021. "Partnership Dissolution with Cash-Constrained Agents," CEIS Research Paper 514, Tor Vergata University, CEIS, revised 10 Oct 2021.
    24. Dastidar, Krishnendu Ghosh & Jain, Sonakshi, 2023. "Favouritism and corruption in procurement auctions," Mathematical Social Sciences, Elsevier, vol. 123(C), pages 10-24.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. A. Talman & Zaifu Yang, 2015. "An efficient multi-item dynamic auction with budget constrained bidders," International Journal of Game Theory, Springer;Game Theory Society, vol. 44(3), pages 769-784, August.
    2. Gerard van der Laan & Zaifu Yang, 2016. "An ascending multi-item auction with financially constrained bidders," The Journal of Mechanism and Institution Design, Society for the Promotion of Mechanism and Institution Design, University of York, vol. 1(1), pages 109-149, December.
    3. Pitchik, Carolyn, 2009. "Budget-constrained sequential auctions with incomplete information," Games and Economic Behavior, Elsevier, vol. 66(2), pages 928-949, July.
    4. Jofre-Bonet, Mireia & Pesendorfer, Martin, 2014. "Optimal sequential auctions," International Journal of Industrial Organization, Elsevier, vol. 33(C), pages 61-71.
    5. Burkett, Justin, 2016. "Optimally constraining a bidder using a simple budget," Theoretical Economics, Econometric Society, vol. 11(1), January.
    6. Brusco, Sandro & Lopomo, Giuseppe & Marx, Leslie M., 2009. "The [`]Google effect' in the FCC's 700Â MHz auction," Information Economics and Policy, Elsevier, vol. 21(2), pages 101-114, June.
    7. Jens Prüfer & David Zetland, 2010. "An auction market for journal articles," Public Choice, Springer, vol. 145(3), pages 379-403, December.
    8. Ghosh, Gagan & Liu, Heng, 2019. "Sequential second-price auctions with private budgets," Games and Economic Behavior, Elsevier, vol. 113(C), pages 611-632.
    9. Burkett, Justin, 2015. "Endogenous budget constraints in auctions," Journal of Economic Theory, Elsevier, vol. 158(PA), pages 1-20.
    10. Giebe, Thomas & Grebe, Tim & Wolfstetter, Elmar, 2006. "How to allocate R&D (and other) subsidies: An experimentally tested policy recommendation," Research Policy, Elsevier, vol. 35(9), pages 1261-1272, November.
    11. Hafalir, Isa E. & Ravi, R. & Sayedi, Amin, 2012. "A near Pareto optimal auction with budget constraints," Games and Economic Behavior, Elsevier, vol. 74(2), pages 699-708.
    12. Gerard van der Laan & Dolf Talman & Zaifu Yang, 2018. "Equilibrium in the Assignment Market under Budget Constraints," Discussion Papers 18/17, Department of Economics, University of York.
    13. Jianfu Shen & Frederik Pretorius & K. W. Chau, 2018. "Land Auctions with Budget Constraints," The Journal of Real Estate Finance and Economics, Springer, vol. 56(3), pages 443-471, April.
    14. Roberto Burguet & R. McAfee, 2009. "License prices for financially constrained firms," Journal of Regulatory Economics, Springer, vol. 36(2), pages 178-198, October.
    15. P. Jean‐Jacques Herings & Yu Zhou, 2022. "Competitive Equilibria In Matching Models With Financial Constraints," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 63(2), pages 777-802, May.
    16. Sandro Brusco & Giuseppe Lopomo, 2004. "Simultaneous Ascending Bid Auctions with Privately Known Budget Constraints," Levine's Bibliography 122247000000000373, UCLA Department of Economics.
    17. Beker, Pablo F. & Hernando-Veciana, Ángel, 2015. "The dynamics of bidding markets with financial constraints," Journal of Economic Theory, Elsevier, vol. 155(C), pages 234-261.
    18. Anat Lerner & Rica Gonen, 2014. "Characterizing the Incentive Compatible and Pareto Optimal Efficiency Space for Two Players, k Items, Public Budget and Quasilinear Utilities," Games, MDPI, vol. 5(2), pages 1-19, April.
    19. Hummel, Patrick, 2017. "Endogenous budget constraints," Mathematical Social Sciences, Elsevier, vol. 88(C), pages 11-15.
    20. Bobkova, Nina, 2020. "Asymmetric budget constraints in a first-price auction," Journal of Economic Theory, Elsevier, vol. 186(C).

    More about this item

    JEL classification:

    • C44 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Operations Research; Statistical Decision Theory
    • D4 - Microeconomics - - Market Structure, Pricing, and Design

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:6102. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.