On the lowest-winning-bid and the highest-losing-bid auctions
AbstractTheoretical models of multi-unit, uniform-price auctions assume that the price is given by the highest losing bid. In practice, however, the price is usually given by the lowest winning bid. We derive the equilibrium bidding function of the lowest-winning-bid auction when there are k objects for sale and n bidders with unit demand, and prove that it converges to the bidding function of the highest-losing-bid auction if and only if the number of losers n-k gets large. When the number of losers grows large, the bidding functions converge at a linear rate and the prices in the two auctions converge in probability to the expected value of an object to the marginal winner.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by Elsevier in its journal Journal of Mathematical Economics.
Volume (Year): 44 (2008)
Issue (Month): 9-10 (September)
Contact details of provider:
Web page: http://www.elsevier.com/locate/jmateco
Other versions of this item:
- Mezzetti, Claudio & Tsetlin, Ilia, 2007. "On the Lowest-Winning-Bid and the Highest-Losing-Bid Auctions," The Warwick Economics Research Paper Series (TWERPS) 832, University of Warwick, Department of Economics.
- Claudio Mezzetti & Ilia Tsetlin, 2006. "On the Lowest-Winning-Bid and the Highest-Losing-Bid Auctions," Discussion Papers in Economics 06/16, Department of Economics, University of Leicester.
- D44 - Microeconomics - - Market Structure and Pricing - - - Auctions
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Bikhchandani, Sushil & Riley, John G., 1991. "Equilibria in open common value auctions," Journal of Economic Theory, Elsevier, vol. 53(1), pages 101-130, February.
- Wolfgang Pesendorfer & Jeroen M. Swinkels, 1996.
"Efficiency and Information Aggregation in Auctions,"
1168, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Jeroen M. Swinkels & Wolfgang Pesendorfer, 2000. "Efficiency and Information Aggregation in Auctions," American Economic Review, American Economic Association, vol. 90(3), pages 499-525, June.
- McAdams, David, 2007. "Uniqueness in symmetric first-price auctions with affiliation," Journal of Economic Theory, Elsevier, vol. 136(1), pages 144-166, September.
- Paul Milgrom & Robert J. Weber, 1981.
"A Theory of Auctions and Competitive Bidding,"
447R, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Ilan Kremer, 2002. "Information Aggregation in Common Value Auctions," Econometrica, Econometric Society, vol. 70(4), pages 1675-1682, July.
- Milgrom, Paul R, 1981. "Rational Expectations, Information Acquisition, and Competitive Bidding," Econometrica, Econometric Society, vol. 49(4), pages 921-43, June.
- Mezzetti, Claudio & Pekec, Aleksandar Sasa & Tsetlin, Ilia, 2008.
"Sequential vs. single-round uniform-price auctions,"
Games and Economic Behavior,
Elsevier, vol. 62(2), pages 591-609, March.
- Claudio Mezzetti & Aleksandar Pekec & Ilia Tsetlin, 2005. "Sequential vs. Single-Round Uniform-Price Auctions," Discussion Papers in Economics 05/26, Department of Economics, University of Leicester, revised Apr 2007.
- Claudio Mezzetti & Aleksandar Pekec & Ilia Tsetlin, 2004. "Sequential vs. Single-Round Uniform-Price Auctions," Working Papers 2004.147, Fondazione Eni Enrico Mattei.
- Han Hong & Harry J. Paarsch & Pai Xu, 2010.
"On the Asymptotic Distribution of the Transaction Price in a Clock Model of a Multi-Unit, Oral, Ascending-Price Auction within the Common-Value Paradigm,"
Carlo Alberto Notebooks
186, Collegio Carlo Alberto.
- Hong, Han & Paarsch, Harry J. & Xu, Pai, 2010. "On the Asymptotic Distribution of the Transaction Price in a Clock Model of a Multi-Unit, Oral, Ascending-Price Auction within the Common-Value Paradigm," CEI Working Paper Series 2010-8, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei).
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 references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link 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 profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.