Equilibria in first price auctions with participation costs
AbstractThis paper characterizes the equilibria of first price auctions with participation costs in the independent private values environment. Bidders use cutoff strategies to decide whether they will participate in the auction. It is shown that, when bidders are homogeneous, there always exists a unique symmetric equilibrium, and further, there is no other equilibrium when valuation distribution functions are inelastic. When distribution functions are elastic at the symmetric equilibrium, there exists an asymmetric equilibrium. Inelasticity/elasticity includes concavity/convexity of distribution functions as a special case. We find similar results when bidders are heterogeneous.
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Bibliographic InfoArticle provided by Elsevier in its journal Games and Economic Behavior.
Volume (Year): 69 (2010)
Issue (Month): 2 (July)
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Web page: http://www.elsevier.com/locate/inca/622836
Private values Participation costs First price auctions Existence and uniqueness of equilibrium;
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