Ranking Asymmetric Auctions using the Dispersive Order
AbstractThe revenue ranking of asymmetric auctions with two heterogenous bidders is examined. The main theorem identifies a general environment in which the first-price auction is more profitable than the second-price auction. By using mechanism design techniques, the problem is simplified and several extensions are made possible. Roughly speaking, the first-price auction is more profitable when the strong bidder's distribution is flatter and more disperse than the weak bidder's distribution. These sufficient conditions turn out to have appealing geometric and economic interpretations. The theorem applies to certain environments with multi-dimensional types. It is also possible, for the first time, to extend the ranking to auctions with reserve prices and to auctions with more bidders. Implications for contests architecture and other auction formats are also pursued.
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Bibliographic InfoPaper provided by University of Guelph, Department of Economics in its series Working Papers with number 1101.
Length: 47 pages
Date of creation: 2011
Date of revision:
Asymmetric Auctions; Convex Transform Order; Dispersive Order; Multi-dimensional types; Revenue Ranking; Star order.;
Find related papers by JEL classification:
- D44 - Microeconomics - - Market Structure and Pricing - - - Auctions
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
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- Gunay, Hikmet & Meng, Xin & Nagelberg, Mark, 2013.
"Reserve price when bidders are asymmetric,"
Economics Discussion Papers
2013-19, Kiel Institute for the World Economy.
- Nicola Doni & Domenico Menicucci, 2011.
"Revenue Comparison in Asymmetric Auctions with Discrete Valuations,"
Economics Working Papers
ECO2011/27, European University Institute.
- Nicola Doni & Domenico Menicucci, 2011. "Revenue Comparison in Asymmetric Auctions with Discrete Valuations," Working Papers Series wp2011_08.rdf, Universita' degli Studi di Firenze, Dipartimento di Scienze dell'Economia e Dell'Impresa.
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