A Note on Revenue Effects of Asymmetry in Private-Value Auctions
AbstractWe formulate a way to study whether the asymmetry of buyers (in the sense of having different prior probability distributions of valuations) is helpful to the seller in private-value auctions (asked first by Cantillon ). In our proposed formulation, this question corresponds to two important questions previously asked: Does a first-price auction have higher revenue than a second-price auction when buyers have asymmetric distributions (asked by Maskin and Riley)? And does a seller enhance revenue by releasing information (asked by Milgrom and Weber)? This is shown by constructing two Harsanyi games of incomplete information each having the same ex-ante distribution of valuations but in one beliefs are symmetric while in the other beliefs are sometimes asymmetric. Our main result is that answers to all three questions coincide when values are independent and are related when values are affiliated.
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Bibliographic InfoPaper provided by Exeter University, Department of Economics in its series Discussion Papers with number 0110.
Date of creation: 2001
Date of revision:
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More information through EDIRC
Asymmetric Auctions; Asymmetric Beliefs; Affiliation; Linkage Principle;
Other versions of this item:
- Todd R. Kaplan & Shmuel Zamir, 2002. "A Note on Revenue Effects of Asymmetry in Private-Value Auctions," Discussion Paper Series dp291, The Center for the Study of Rationality, Hebrew University, Jerusalem.
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
- D44 - Microeconomics - - Market Structure and Pricing - - - Auctions
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
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- Maskin, Eric & Riley, John, 2000. "Asymmetric Auctions," Review of Economic Studies, Wiley Blackwell, vol. 67(3), pages 413-38, July.
- Cantillon, Estelle, 2008.
"The effect of bidders' asymmetries on expected revenue in auctions,"
Games and Economic Behavior,
Elsevier, vol. 62(1), pages 1-25, January.
- Estelle Cantillon, 2000. "The Effect of Bidders' Asymmetries on Expected Revenue in Auctions," Cowles Foundation Discussion Papers 1279, Cowles Foundation for Research in Economics, Yale University.
- Estelle Cantillon, 2008. "The effect of bidders' asymmetries on expected revenue in auctions," ULB Institutional Repository 2013/9001, ULB -- Universite Libre de Bruxelles.
- Cheng, Harrison, 2006. "Ranking sealed high-bid and open asymmetric auctions," Journal of Mathematical Economics, Elsevier, vol. 42(4-5), pages 471-498, August.
- Lamping, Jennifer, 2008. "Ignorance Is Bliss: Matching in Auctions with an Uninformed Seller," MPRA Paper 24374, University Library of Munich, Germany.
- Kaplan, Todd & Sela, Aner, 2003. "Auctions with Private Entry Costs," CEPR Discussion Papers 4080, C.E.P.R. Discussion Papers.
- Cheng, Harrison, 2011. "Asymmetry and revenue in first-price auctions," Economics Letters, Elsevier, vol. 111(1), pages 78-80, April.
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