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Ranking Asymmetric Auctions using the Dispersive Order

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Author Info

  • Rene Kirkegaard

    ()
    (Department of Economics,University of Guelph)

Abstract

The 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 Info

Paper provided by University of Guelph, Department of Economics and Finance in its series Working Papers with number 1101.

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Length: 47 pages
Date of creation: 2011
Date of revision:
Handle: RePEc:gue:guelph:2011-01.

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Related research

Keywords: Asymmetric Auctions; Convex Transform Order; Dispersive Order; Multi-dimensional types; Revenue Ranking; Star order.;

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Cited by:
  1. Gunay, Hikmet & Meng, Xin & Nagelberg, Mark, 2013. "Reserve price when bidders are asymmetric," Economics Discussion Papers 2013-19, Kiel Institute for the World Economy.
  2. Shivangi Chandel & Shubhro Sarkar, 2014. "Revenue non-equivalence in multidimensional procurement auctions under asymmetry," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2014-008, Indira Gandhi Institute of Development Research, Mumbai, India.
  3. Nicola Doni & Domenico Menicucci, 2011. "Revenue Comparison in Asymmetric Auctions with Discrete Valuations," Economics Working Papers ECO2011/27, European University Institute.

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