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Cross and Double Cross: Comparative Statics in First Price and All Pay Auctions

Author

Listed:
  • Hopkins Ed

    () (University of Edinburgh)

  • Kornienko Tatiana

    () (University of Stirling)

Abstract

This paper analyses comparative statics for first price auctions and all pay auctions with independent private values. In all pay auctions, bidders with low values will respond to a stochastically higher (in the sense of likelihood ratio dominance) distribution of types by playing less aggressively while high value bidders bid more. In the first price auction, a similar change results in all types playing more aggressively. Furthermore, we show that a decrease in dispersion of values, in the sense of a refinement of second order stochastic dominance, although also associated with an increase in competitiveness, may in addition result in less aggressive play by bidders with high values in both auction forms. We also find similar considerations in an oligopoly game with incomplete information: stochastically lower costs can lead to higher prices.

Suggested Citation

  • Hopkins Ed & Kornienko Tatiana, 2007. "Cross and Double Cross: Comparative Statics in First Price and All Pay Auctions," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 7(1), pages 1-25, May.
  • Handle: RePEc:bpj:bejtec:v:7:y:2007:i:1:n:19
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    Citations

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    Cited by:

    1. Ed Hopkins, 2007. "Rank-Based Methods for the Analysis of Auctions," ESE Discussion Papers 173, Edinburgh School of Economics, University of Edinburgh.
    2. de Castro, Luciano I. & de Frutos, María-Angeles, 2010. "How to translate results from auctions to procurements," Economics Letters, Elsevier, vol. 106(2), pages 115-118, February.
    3. Thomas Giebe & Paul Schweinzer, "undated". "All-pay aspects of decision making under public scrutiny," Discussion Papers 11/27, Department of Economics, University of York.
    4. Thomas Giebe & Paul Schweinzer, 2014. "All-pay-all aspects of political decision making," Public Choice, Springer, vol. 161(1), pages 73-90, October.
    5. Kirkegaard Rene, 2008. "Comparative Statics and Welfare in Heterogeneous All-Pay Auctions: Bribes, Caps, and Performance Thresholds," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 8(1), pages 1-32, September.
    6. Kirkegaard, René, 2009. "Asymmetric first price auctions," Journal of Economic Theory, Elsevier, vol. 144(4), pages 1617-1635, July.
    7. Mares, Vlad & Swinkels, Jeroen M., 2014. "On the analysis of asymmetric first price auctions," Journal of Economic Theory, Elsevier, vol. 152(C), pages 1-40.
    8. René Kirkegaard, 2007. "Comparative Statics and Welfare in Heterogeneous Contests: Bribes, Caps, and Performance Thresholds," Working Papers 0702, Brock University, Department of Economics.

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