First-Price Auctions when the Ranking of Valuations is Common Knowledge
AbstractWe consider a first-price auction when the ranking of bidders' private valuations is common knowledge among bidders. This new informational framework is motivated by several applications, from procurement to privatization. It induces a particular asymmetric auction model with affiliated private values that has several interesting properties but raises serious technical complications. We prove existence and uniqueness of equilibrium in pure strategies and show that the seller's reven generally higher in a first-price than in second-price and English auctions, in contrast to the ranking in the affiliated values model by Milgrom and Weber. This also implies that in first-price auctions, providing information concerning the ranking of valuations among bidders tends to increase the seller's expected revenue.
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Bibliographic InfoPaper provided by Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes in its series SFB 373 Discussion Papers with number 1996,36.
Date of creation: 1996
Date of revision:
Other versions of this item:
- Jacob Rubinstein & Elmar Wolfstetter & Michael Landsberger & Shmuel Zamir, 2001. "First-price auctions when the ranking of valuations is common knowledge," Review of Economic Design, Springer, Springer, vol. 6(3), pages 461-480.
- Michael Landsberger & Jacob Rubinstein & Elmar Wolfstetter & Shmuel Zamir, 1999. "First-Price Auctions when the Ranking of Valuations is Common Knowledge," Working Papers, Centre de Recherche en Economie et Statistique 99-18, Centre de Recherche en Economie et Statistique.
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