Revenue Comparison in Asymmetric Auctions with Discrete Valuations
We consider an asymmetric auction setting with two bidders such that the valuation of each bidder has a binary support. First, we characterize the unique equilibrium outcome in the first price auction for any values of parameters. Then we compare the first price auction with the second price auction in terms of expected revenue. Under the assumption that the probabilities of low values are the same for the two bidders, we obtain two main results: (i) the second price auction yields a higher revenue unless the distribution of a bidder’s valuation first-order stochastically dominates the distribution of the other bidder’s valuation “in a strong sense” and (ii) introducing reserve prices implies that the first price auction is never superior to the second price auction. In addition, in some cases, the revenue in the first price auction decreases when all the valuations increase.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 13 (2013)
Issue (Month): 1 (September)
|Contact details of provider:|| Web page: http://www.degruyter.com|
|Order Information:||Web: http://www.degruyter.com/view/j/bejte|
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Kirkegaard, René, 2009. "Asymmetric first price auctions," Journal of Economic Theory, Elsevier, vol. 144(4), pages 1617-1635, July.
- Paul Klemperer, 1999.
"Auction Theory: A Guide to the Literature,"
- Plum, M, 1992. "Characterization and Computation of Nash-Equilibria for Auctions with Incomplete Information," International Journal of Game Theory, Springer, vol. 20(4), pages 393-418.
- Cheng, Harrison, 2006. "Ranking sealed high-bid and open asymmetric auctions," Journal of Mathematical Economics, Elsevier, vol. 42(4-5), pages 471-498, August.
- Estelle Cantillon, 2000.
"The Effect of Bidders' Asymmetries on Expected Revenue in Auctions,"
Cowles Foundation Discussion Papers
1279, Cowles Foundation for Research in Economics, Yale University.
- Cantillon, Estelle, 2008. "The effect of bidders' asymmetries on expected revenue in auctions," Games and Economic Behavior, Elsevier, vol. 62(1), pages 1-25, January.
- Estelle Cantillon, 2008. "The effect of bidders' asymmetries on expected revenue in auctions," ULB Institutional Repository 2013/9001, ULB -- Universite Libre de Bruxelles.
- Rene Kirkegaard, 2011. "Ranking Asymmetric Auctions using the Dispersive Order," Working Papers 1101, University of Guelph, Department of Economics and Finance.
- Maskin, Eric & Riley, John, 2000. "Equilibrium in Sealed High Bid Auctions," Review of Economic Studies, Wiley Blackwell, vol. 67(3), pages 439-54, July.
- Arieh Gavious & Yizhaq Minchuk, 2014. "Ranking asymmetric auctions," International Journal of Game Theory, Springer, vol. 43(2), pages 369-393, May.
- Eric S. Maskin & John G. Riley, 1985.
"Auction Theory with Private Values,"
UCLA Economics Working Papers
359, UCLA Department of Economics.
- Eric Maskin & John G. Riley, 1983. "Auctions with Asymmetric Beliefs," UCLA Economics Working Papers 254, UCLA Department of Economics.
- Li, Huagang & Riley, John G., 2007. "Auction choice," International Journal of Industrial Organization, Elsevier, vol. 25(6), pages 1269-1298, December.
When requesting a correction, please mention this item's handle: RePEc:bpj:bejtec:v:13:y:2013:i:1:p:33:n:9. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Peter Golla)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.