Declining Valuations in Sequential Auctions
AbstractWe analyze an independent private values model where a number of objects are sold in sequential first- and second-price auctions. Bidders have unit demand and their valuation for an object is decreasing in the rank number of the auction in which it is sold. We derive efficient equilibria if prices are announced after each auction or if no information is given to bidders. We show that the sequence of prices constitutes a supermartingale. Even if we correct for the decrease in valuations for objects sold in later auctions we find that average prices are declining.
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Bibliographic InfoPaper provided by The Center for the Study of Rationality, Hebrew University, Jerusalem in its series Discussion Paper Series with number dp385.
Length: 27 pages
Date of creation: Jan 2004
Date of revision:
Other versions of this item:
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- D44 - Microeconomics - - Market Structure and Pricing - - - Auctions
This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-07-03 (All new papers)
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- Said, Maher, 2008. "Information Revelation and Random Entry in Sequential Ascending Auctions," MPRA Paper 7160, University Library of Munich, Germany.
- Schweinzer, Paul, 2006. "Labour market screening with intermediaries," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 138, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
- Bruno Larue & Mohamed Jeddy & Sébastien Pouliot, 2013. "On the Number of Bidders and Auction Performance: when More Means Less," Cahiers de recherche CREATE 2013-4, CREATE.
- Paul Schweinzer, 2008. "Labour market recruiting with intermediaries," Review of Economic Design, Springer, vol. 12(2), pages 119-127, June.
- Kannan, Karthik N., 2010. "Declining prices in sequential auctions with complete revelation of bids," Economics Letters, Elsevier, vol. 108(1), pages 49-51, July.
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