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Sequential vs. Single-Round Uniform-Price Auctions

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  • Claudio Mezzetti

    ()

  • Aleksandar Pekec
  • Ilia Tsetlin

Abstract

We study sequential and single-round uniform-price auctions with affiliated values. We derive symmetric equilibrium for the auction in which k1 objects are sold in the first round and k2 in the second round, with and without revelation of the first-round winning bids. We demonstrate that auctioning objects in sequence generates a lowballing effect that reduces the first-round price. Total revenue is greater in a single-round, uniform auction for k = k1 + k2 objects than in a sequential uniform auction with no bid announcement. When the first-round winning bids are announced, we also identify a positive informational effect on the second-round price. Total expected revenue in a sequential uniform auction with winning-bids announcement may be greater or smaller than in a single-round uniform auction, depending on the model’s parameters.

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Bibliographic Info

Paper provided by Department of Economics, University of Leicester in its series Discussion Papers in Economics with number 05/26.

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Date of creation: Aug 2005
Date of revision: Apr 2007
Handle: RePEc:lec:leecon:05/26

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Postal: Department of Economics University of Leicester, University Road. Leicester. LE1 7RH. UK
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Keywords: Multi-Unit Auctions; Sequential Auctions; Uniform-Price Auction; Affiliated Values; Information Revelation;

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  1. William Vickrey, 1961. "Counterspeculation, Auctions, And Competitive Sealed Tenders," Journal of Finance, American Finance Association, vol. 16(1), pages 8-37, 03.
  2. Milgrom, Paul R & Weber, Robert J, 1982. "A Theory of Auctions and Competitive Bidding," Econometrica, Econometric Society, vol. 50(5), pages 1089-1122, September.
  3. Mezzetti, Claudio & Tsetlin, Ilia, 2008. "On the lowest-winning-bid and the highest-losing-bid auctions," Journal of Mathematical Economics, Elsevier, vol. 44(9-10), pages 1040-1048, September.
  4. Motty Perry & Philip J. Reny, 1999. "On The Failure of the Linkage Principle in Multi-Unit Auctions," Econometrica, Econometric Society, vol. 67(4), pages 895-900, July.
  5. Klemperer, Paul, 1999. "Auction Theory: a Guide to the Literature," CEPR Discussion Papers 2163, C.E.P.R. Discussion Papers.
  6. Angeles de Frutos, Maria & Rosenthal, Robert W., 1998. "On Some Myths about Sequenced Common-Value Auctions," Games and Economic Behavior, Elsevier, vol. 23(2), pages 201-221, May.
  7. Donald B. Hausch, 1986. "Multi-Object Auctions: Sequential vs. Simultaneous Sales," Management Science, INFORMS, vol. 32(12), pages 1599-1610, December.
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Cited by:
  1. Paul Pezanis-Christou, 2013. "Asymmetric Multiple-Object First-Price Auctions," School of Economics Working Papers 2013-07, University of Adelaide, School of Economics.
  2. Francesco Giovannoni & Miltiadis Makris, 2014. "Reputational Bidding," Bristol Economics Discussion Papers 14/641, Department of Economics, University of Bristol, UK.

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