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Ranking reversals in asymmetric auctions

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  • Kirkegaard, René

Abstract

This paper compares the first-price auction and the second-price auction with several asymmetric bidders who are either weak or strong. The ranking of these auctions in terms of profit may flip as the exogenous reserve price or the number of weak or strong bidders change. Similarly, with endogenous reserve prices the ranking may depend on the seller’s own-use valuation. In other words, the ranking may be fragile to changes along these dimensions. Existing models rule out such ranking reversals by imposing substantial structure on type distributions. The current paper relies on simple mechanism design arguments that require less structure.

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  • Kirkegaard, René, 2021. "Ranking reversals in asymmetric auctions," Journal of Mathematical Economics, Elsevier, vol. 95(C).
    • Handle: RePEc:eee:mateco:v:95:y:2021:i:c:s0304406821000161
    DOI: 10.1016/j.jmateco.2021.102478
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    Cited by:

    1. Kirkegaard, René, 2022. "Efficiency in asymmetric auctions with endogenous reserve prices," Games and Economic Behavior, Elsevier, vol. 132(C), pages 234-239.

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    Keywords

    Asymmetric auctions; Profit ranking;

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