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First-price auctions with resale and with outcomes robust to bid disclosure

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  • Bernard Lebrun

Abstract

Although there exists a pure separating equilibrium of the two-bidder first-price auction with resale when the bids are kept secret, the ratchet effect prevents the existence of such an equilibrium if the bidders are heterogeneous and the bids are fully disclosed. Nevertheless, we construct a behavioral equilibrium under full disclosure that is equivalent to the pure separating equilibrium under no disclosure. Thus, if the bidders follow this equilibrium, the choice of the disclosure regime does not affect the final allocation of the item nor the expected payoffs. Copyright (c) 2010, RAND.

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  • Bernard Lebrun, 2010. "First-price auctions with resale and with outcomes robust to bid disclosure," RAND Journal of Economics, RAND Corporation, vol. 41(1), pages 165-178.
  • Handle: RePEc:bla:randje:v:41:y:2010:i:1:p:165-178
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    File URL: http://www.blackwell-synergy.com/doi/abs/10.1111/j.1756-2171.2009.00094.x
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    References listed on IDEAS

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    1. Rod Garratt & Thomas Tröger, 2006. "Speculation in Standard Auctions with Resale," Econometrica, Econometric Society, vol. 74(3), pages 753-769, May.
    2. Charles Zhoucheng Zheng, 2002. "Optimal Auction with Resale," Econometrica, Econometric Society, vol. 70(6), pages 2197-2224, November.
    3. Goeree, Jacob K., 2003. "Bidding for the future: signaling in auctions with an aftermarket," Journal of Economic Theory, Elsevier, vol. 108(2), pages 345-364, February.
    4. Haile, Philip A., 2000. "Partial Pooling at the Reserve Price in Auctions with Resale Opportunities," Games and Economic Behavior, Elsevier, vol. 33(2), pages 231-248, November.
    5. Das Varma, Gopal, 2003. "Bidding for a process innovation under alternative modes of competition," International Journal of Industrial Organization, Elsevier, vol. 21(1), pages 15-37, January.
    6. Hafalir, Isa & Krishna, Vijay, 2009. "Revenue and efficiency effects of resale in first-price auctions," Journal of Mathematical Economics, Elsevier, vol. 45(9-10), pages 589-602, September.
    7. Lebrun, Bernard, 1999. "First Price Auctions in the Asymmetric N Bidder Case," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 40(1), pages 125-142, February.
    8. Subir Bose & George Deltas, 2007. "Exclusive Versus Non-exclusive Dealing in Auctions with Resale," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 31(1), pages 1-17, April.
    9. Giacomo Calzolari & Alessandro Pavan, 2006. "Monopoly with resale," RAND Journal of Economics, RAND Corporation, vol. 37(2), pages 362-375, June.
    10. Isa Hafalir & Vijay Krishna, 2008. "Asymmetric Auctions with Resale," American Economic Review, American Economic Association, vol. 98(1), pages 87-112, March.
    11. Paul R. Milgrom & Robert J. Weber, 1985. "Distributional Strategies for Games with Incomplete Information," Mathematics of Operations Research, INFORMS, vol. 10(4), pages 619-632, November.
    12. Roger B. Myerson, 1981. "Optimal Auction Design," Mathematics of Operations Research, INFORMS, vol. 6(1), pages 58-73, February.
    13. Haile, Philip A., 2003. "Auctions with private uncertainty and resale opportunities," Journal of Economic Theory, Elsevier, vol. 108(1), pages 72-110, January.
    14. Gupta, Madhurima & Lebrun, Bernard, 1999. "First price auctions with resale," Economics Letters, Elsevier, vol. 64(2), pages 181-185, August.
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    Cited by:

    1. Hafalir Isa & Kurnaz Musab, "undated". "Discriminatory Auctions with Resale," GSIA Working Papers 2015-E12, Carnegie Mellon University, Tepper School of Business.
    2. repec:eee:indorg:v:55:y:2017:i:c:p:58-90 is not listed on IDEAS
    3. Charles Z. Zheng, 2014. "Existence of Monotone Equilibria in First-Price Auctions with Resale," University of Western Ontario, Economic Policy Research Institute Working Papers 20141, University of Western Ontario, Economic Policy Research Institute.
    4. Celik, Gorkem & Yilankaya, Okan, 2017. "Resale in second-price auctions with costly participation," International Journal of Industrial Organization, Elsevier, vol. 54(C), pages 148-174.
    5. Fan, Cuihong & Jun, Byoung Heon & Wolfstetter, Elmar G., 2016. "Optimal bid disclosure in patent license auctions under alternative modes of competition," International Journal of Industrial Organization, Elsevier, vol. 47(C), pages 1-32.
    6. Lebrun, Bernard, 2012. "Optimality and the English and second-price auctions with resale," Games and Economic Behavior, Elsevier, vol. 75(2), pages 731-751.
    7. Bergemann, Dirk & Wambach, Achim, 2015. "Sequential information disclosure in auctions," Journal of Economic Theory, Elsevier, vol. 159(PB), pages 1074-1095.
    8. Kaplan, Todd R. & Zamir, Shmuel, 2015. "Advances in Auctions," Handbook of Game Theory with Economic Applications, Elsevier.
    9. Filiz-Ozbay, Emel & Lopez-Vargas, Kristian & Ozbay, Erkut Y., 2015. "Multi-object auctions with resale: Theory and experiment," Games and Economic Behavior, Elsevier, vol. 89(C), pages 1-16.
    10. Laurent Lamy, 2010. "Identification and estimation of sequential English auctions," Working Papers halshs-00564887, HAL.

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