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Sequential equilibria of asymmetric ascending auctions: The case of log-normal distributions

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  • Robert Wilson

    (Business School, Stanford University, Stanford, CA 94305-5015, USA)

Abstract

The sequential equilibrium of an ascending-price auction of a single item is derived explicitly for the case of log-normal distributions and a multiplicative valuation model comprising both common and private factors, and allowing asymmetries. If the prior distribution on the common factors is diffuse, or of the form obtained by Bayesian updating from a diffuse prior distribution, then the equilibrium strategies are log-linear with coefficients obtained by solving a set of linear equations. A similar construction applies to normal distributions and additive terms in the valuation model. An example illustrates the predictions derived from the model.

Suggested Citation

  • Robert Wilson, 1998. "Sequential equilibria of asymmetric ascending auctions: The case of log-normal distributions," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 12(2), pages 433-440.
    • Handle: RePEc:spr:joecth:v:12:y:1998:i:2:p:433-440
    Note: Received: December 11, 1996; revised version: July 15, 1997
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