Multiple equilibria in asymmetric first-price auctions
AbstractMaskin and Riley (2003) and Lebrun (2006) prove that the Bayes-Nash equilibrium of �rst-price auctions is unique. This uniqueness requires the assumption that a buyer never bids above his value. We demonstrate that, in asymmetric �rst-price auctions (with or without a minimum bid), the relaxation of this assumption results in additional equilibria that are "substantial." Although in each of these additional equilibria no buyer wins with a bids above his value, the allocation of the object and the selling price may vary among the equilibria. Furthermore, we show that such phenomena can only occur under asymmetry in the distributions of values.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 34937.
Date of creation: 21 Nov 2011
Date of revision:
Asymmetric auctions; �first-price auctions; multiple equilibria;
Other versions of this item:
- Todd R. Kaplan & Shmuel Zamir, 2011. "Multiple Equilibria in Asymmetric First-Price Auctions," Discussion Paper Series dp591, The Center for the Study of Rationality, Hebrew University, Jerusalem.
- D44 - Microeconomics - - Market Structure and Pricing - - - Auctions
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-12-13 (All new papers)
- NEP-CTA-2011-12-13 (Contract Theory & Applications)
- NEP-GTH-2011-12-13 (Game Theory)
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- Andreas Blume & Paul Heidhues & Jonathan Lafky & Johannes Muenster & Meixia Zhang, 2006.
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195, University of Pittsburgh, Department of Economics, revised Jan 2006.
- Blume, Andreas & Heidhues, Paul & Lafky, Jonathan & Münster, Johannes & Zhang, Meixia, 2006. "All Nash Equilibria of the Multi-Unit Vickrey Auction," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 116, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
- Lebrun, Bernard, 2006. "Uniqueness of the equilibrium in first-price auctions," Games and Economic Behavior, Elsevier, vol. 55(1), pages 131-151, April.
- McAdams, David, 2007. "Uniqueness in symmetric first-price auctions with affiliation," Journal of Economic Theory, Elsevier, vol. 136(1), pages 144-166, September.
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