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Existence of an equilibrium in first price auctions (*)

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Author Info
Bernard Lebrun (DÊpartement d'Êconomique, UniversitÊ Laval, Pavillon J.-A.-DeSÉve, QuÊbec, Canada G1K 7P4)
Abstract

We study the first price auction game with an arbitrary number of bidders when the bidders' valuations are independent from each other. In technical words, we work within the "independent private value model". We show that if the supports of the valuation probability distributions have the same minimum and if this minimum is not a mass point of any of these distributions, then a Nash equilibrium of the first price auction exists. We then modify the first price auction game by adding a closed interval of messages. Every bidder has to send a message with the bid he submits. These messages are used in the resolution of the ties. The winner of the auction is chosen randomly among the highest bidders with the highest value of the message among the highest bidders. In the general case, we prove the existence of a Nash equilibrium for this "augmented" first price auction.

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Publisher Info
Article provided by Springer in its journal Economic Theory.

Volume (Year): 7 (1996)
Issue (Month): 3 ()
Pages: 421-443
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Handle: RePEc:spr:joecth:v:7:y:1996:i:3:p:421-443

Note: Received: March 23, 1994; revised version February 6, 1995
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  1. Wayne-Roy Gayle & Jean Richard, 2008. "Numerical Solutions of Asymmetric, First-Price, Independent Private Values Auctions," Computational Economics, Springer, vol. 32(3), pages 245-278, October. [Downloadable!] (restricted)
  2. Leonardo Rezende, 2009. "Biased procurement auctions," Economic Theory, Springer, vol. 38(1), pages 169-185, January. [Downloadable!] (restricted)
  3. Leslie M. Marx & Robert C. Marshall, 2004. "Bidder Collusion," Econometric Society 2004 North American Winter Meetings 108, Econometric Society. [Downloadable!]
  4. Olivier Armantier & Jean-Pierre Florens & Jean-Francois Richard, 2008. "Approximation of Nash equilibria in Bayesian games," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 23(7), pages 965-981. [Downloadable!]
  5. Patrick Bajari, . "Comparing Competition and Collusion in Procurement Auctions: A Numerical Approach," Working Papers 00003, Stanford University, Department of Economics. [Downloadable!]
  6. Eric Maskin & John Riley, 2003. "Uniqueness of Equilibrium in Sealed High-Bid Auctions," Economics Working Papers 0031, Institute for Advanced Study, School of Social Science. [Downloadable!]
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  7. Leandro Arozamena & Estelle Cantillon, 2000. "Investment Incentives in Procurement Auctions," Cowles Foundation Discussion Papers 1276, Cowles Foundation, Yale University. [Downloadable!]
    Other versions:
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