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Sealed-bid auctions based on Cobb-Douglas utility function

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  • Liu, Shulin
  • Wang, Mingxi
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    Abstract

    This paper presents a more general independent private value model based on the assumption that Cobb-Douglas utility function is used to make a tradeoff between the probability of winning the unit and the profit under the first-price and second-price sealed-bid auctions. The equilibrium bidding strategies are given and the seller's expected revenue comparisons are made.

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    File URL: http://www.sciencedirect.com/science/article/B6V84-4WFG5NJ-1/2/96c1eb12f5d6287b421b639e5e046a16
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    Bibliographic Info

    Article provided by Elsevier in its journal Economics Letters.

    Volume (Year): 107 (2010)
    Issue (Month): 1 (April)
    Pages: 1-3

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    Handle: RePEc:eee:ecolet:v:107:y:2010:i:1:p:1-3

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    Web page: http://www.elsevier.com/locate/ecolet

    Related research

    Keywords: First-price and second-price sealed-bid auctions Bidding strategy Expected revenue Cobb-Douglas utility function;

    References

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    1. Wolfstetter, Elmar, 1996. " Auctions: An Introduction," Journal of Economic Surveys, Wiley Blackwell, vol. 10(4), pages 367-420, December.
    2. J. Riley & E. Maskin, 1981. "Optimal Auctions with Risk Averse Buyers," Working papers 311, Massachusetts Institute of Technology (MIT), Department of Economics.
    3. Milgrom, Paul R & Weber, Robert J, 1982. "A Theory of Auctions and Competitive Bidding," Econometrica, Econometric Society, vol. 50(5), pages 1089-1122, September.
    4. Milgrom, Paul, 1989. "Auctions and Bidding: A Primer," Journal of Economic Perspectives, American Economic Association, vol. 3(3), pages 3-22, Summer.
    5. Riley, John G & Samuelson, William F, 1981. "Optimal Auctions," American Economic Review, American Economic Association, vol. 71(3), pages 381-92, June.
    6. repec:wop:humbsf:2000-72 is not listed on IDEAS
    7. Che, Yeon-Koo & Gale, Ian, 1996. "Expected revenue of all-pay auctions and first-price sealed-bid auctions with budget constraints," Economics Letters, Elsevier, vol. 50(3), pages 373-379, March.
    8. Maskin, Eric & Riley, John, 2000. "Asymmetric Auctions," Review of Economic Studies, Wiley Blackwell, vol. 67(3), pages 413-38, July.
    9. McAfee, R Preston & McMillan, John, 1987. "Auctions and Bidding," Journal of Economic Literature, American Economic Association, vol. 25(2), pages 699-738, June.
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    Cited by:
    1. Corchón, Luis & Dahm, Matthias, 2011. "Welfare maximizing contest success functions when the planner cannot commit," Journal of Mathematical Economics, Elsevier, vol. 47(3), pages 309-317.

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