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Revenue Guarantee Equivalence

Author

Listed:
  • Dirk Bergemann
  • Benjamin Brooks
  • Stephen Morris

Abstract

We revisit the revenue comparison of standard auction formats, including first-price, second-price, and English auctions. We rank auctions according to their revenue guarantees, i.e., the greatest lower bound of revenue across all informational environments, where we hold fixed the distribution of bidders' values. We conclude that if we restrict attention to the symmetric affiliated models of Milgrom and Weber (1982) and monotonic pure-strategy equilibria, first-price, second-price, and English auctions are revenue guarantee equivalent: they have the same revenue guarantee, which is equal to that of the first-price auction as characterized by Bergemann, Brooks, and Morris (2017). If we consider all equilibria or if we allow more general models of information, then first-price auctions have a greater revenue guarantee than all other auctions considered.

Suggested Citation

  • Dirk Bergemann & Benjamin Brooks & Stephen Morris, 2019. "Revenue Guarantee Equivalence," American Economic Review, American Economic Association, vol. 109(5), pages 1911-1929, May.
    • Handle: RePEc:aea:aecrev:v:109:y:2019:i:5:p:1911-29
    Note: DOI: 10.1257/aer.20180773
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    Cited by:

    1. Yeon-Koo Che & Weijie Zhong, 2021. "Robustly Optimal Mechanisms for Selling Multiple Goods," Papers 2105.02828, arXiv.org, revised Aug 2024.
    2. Satoshi Nakada & Shmuel Nitzan & Takashi Ui, 2025. "Robust Voting under Uncertainty," Papers 2507.22655, arXiv.org.
    3. Kim, Kyungmin & Koh, Youngwoo, 2022. "Auctions with flexible information acquisition," Games and Economic Behavior, Elsevier, vol. 133(C), pages 256-281.
    4. Abraham, Ittai & Athey, Susan & Babaioff, Moshe & Grubb, Michael D., 2020. "Peaches, lemons, and cookies: Designing auction markets with dispersed information," Games and Economic Behavior, Elsevier, vol. 124(C), pages 454-477.
    5. Wanchang Zhang, 2021. "Random Double Auction: A Robust Bilateral Trading Mechanism," Papers 2105.05427, arXiv.org, revised May 2022.
    6. He, Wei & Li, Jiangtao, 2022. "Correlation-robust auction design," Journal of Economic Theory, Elsevier, vol. 200(C).
    7. Soheil Ghili & K. Sudhir & Nitish Jain & Ankur Garg, 2025. "Second-degree Price Discrimination: Theoretical Analysis, Experiment Design, and Empirical Estimation," Papers 2507.13426, arXiv.org, revised Oct 2025.
    8. Pycia, Marek & Woodward, Kyle, 2021. "Auctions of Homogeneous Goods: A Case for Pay-as-Bid," CEPR Discussion Papers 15656, C.E.P.R. Discussion Papers.

    More about this item

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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