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Auctioning divisible goods

Author

Listed:
  • Jaime F. Zender

    () (Eller College of Business, University of Arizona, Tucson, AZ 85721, USA)

  • James J.D. Wang

    () (Fuqua School of Business, Duke University, Durham, NC 27708, USA)

Abstract

We derive equilibrium bidding strategies in divisible good auctions for asymmetrically informed risk neutral and risk averse bidders when there is random noncompetitive demand. The equilibrium bid schedules contain both strategic considerations and explicit allowances for the winner's curse. When the bidders' information is symmetric, the strategic aspects of bidding imply that there always exist equilibria of a uniform-price auction with lower expected revenue than provided by a discriminatory auction. When bidders are risk averse, there may exist equilibria of the uniform-price auction that provide higher expected revenue than a discriminatory auction.

Suggested Citation

  • Jaime F. Zender & James J.D. Wang, 2002. "Auctioning divisible goods," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 19(4), pages 673-705.
  • Handle: RePEc:spr:joecth:v:19:y:2002:i:4:p:673-705 Note: Received: November 4, 1999; revised version: March 9, 2001
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    References listed on IDEAS

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    1. Eric Maskin & Jean Tirole, 2004. "The Politician and the Judge: Accountability in Government," American Economic Review, American Economic Association, pages 1034-1054.
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    More about this item

    Keywords

    Divisible good auctions; Treasury auctions; Equilibrium bidding.;

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions

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