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A Note On The Effect Of Asymmetry On Revenue In Second-Price Auctions

Author

Listed:
  • ARIEH GAVIOUS

    (Faculty of Business Administration, Ono Academic College, Israel;
    Department of Industrial Engineering and Management, Ben-Gurion University, Israel)

  • YIZHAQ MINCHUK

    (Department of Industrial Engineering and Management, Ben-Gurion University, Israel)

Abstract

We compare the seller's expected revenue in asymmetric second-price auctions with the benchmark case where all bidders have the average distribution. We show that with two bidders, asymmetry has a negative effect on revenue. However, forn > 2bidders there is no clear observation we can make. We prove that in the case of weak asymmetry, sellers prefer asymmetry over low valuations and symmetry over high valuations. In addition, we show that a good approximation for the expected revenue in the case of weak asymmetry can be obtained by calculating the revenue of the symmetric auction with identical distributions equal to the geometric or arithmetic average.

Suggested Citation

  • Arieh Gavious & Yizhaq Minchuk, 2012. "A Note On The Effect Of Asymmetry On Revenue In Second-Price Auctions," International Game Theory Review (IGTR), World Scientific Publishing Co. Pte. Ltd., vol. 14(03), pages 1-8.
    • Handle: RePEc:wsi:igtrxx:v:14:y:2012:i:03:n:s0219198912500193
    DOI: 10.1142/S0219198912500193
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    References listed on IDEAS

    as
    1. Todd R. Kaplan & Shmuel Zamir, 2001. "A Note on Revenue Effects of Asymmetry in Private-Value Auctions," Discussion Papers 0110, University of Exeter, Department of Economics.
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    Citations

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    Cited by:

    1. Nathalie Gimenes, 2014. "Econometrics of Ascending Auctions by Quantile Regression," Working Papers, Department of Economics 2014_25, University of São Paulo (FEA-USP).

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    More about this item

    Keywords

    Second-price auctions; asymmetric auctions; D44; D82;
    All these keywords.

    JEL classification:

    • B4 - Schools of Economic Thought and Methodology - - Economic Methodology
    • C0 - Mathematical and Quantitative Methods - - General
    • C6 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling
    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
    • D5 - Microeconomics - - General Equilibrium and Disequilibrium
    • D7 - Microeconomics - - Analysis of Collective Decision-Making
    • M2 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics

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