Equilibria in Second Price Auctions with Participation Costs
AbstractWe investigate equilibria of sealed-bid second price auctions with bidder participation costs in the independent private values environment. We focus on equilibria in which bidders use cut-off strategies (bid the valuation if it is greater than a certain cut-off point, otherwise do not participate), since if a bidder finds participating optimal, she cannot do better than bidding her valuation. When the bidders are symmetric, the concavity (respectively, strict convexity) of the c.d.f. from which the valuations are drawn is a sufficient condition for uniqueness (respectively, multiplicity) within this class. We also study a special case with asymmetric bidders and show that concavity/convexity plays a similar role.
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Bibliographic InfoPaper provided by Vancouver School of Economics in its series Microeconomics.ca working papers with number tan-04-01-24-10-08-06.
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Date of creation: 24 Jan 2004
Date of revision: 09 Jun 2006
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Second price auctions; participation costs; multiplicity of equilibria;
Other versions of this item:
- Tan, Guofu & Yilankaya, Okan, 2006. "Equilibria in second price auctions with participation costs," Journal of Economic Theory, Elsevier, vol. 130(1), pages 205-219, September.
- Guofu Tan & Okan Yilankaya, 2005. "Equilibria in Second Price Auctions with Participation Costs," IEPR Working Papers 05.7, Institute of Economic Policy Research (IEPR).
- C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
- D44 - Microeconomics - - Market Structure and Pricing - - - Auctions
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
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