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Revenue implications of choosing discrete bid levels in a Japanese–English auction

Author

Listed:
  • Ricardo Gonçalves

    (Universidade Católica Portuguesa)

  • Indrajit Ray

    (Cardiff University)

Abstract

We consider the set-up of a Japanese–English auction with exogenously fixed discrete bid levels for a specific game (the wallet game with two bidders, following Gonçalves and Ray in Econ Lett 159:177–179, 2017). We show that in this auction, partition equilibria exist that may be separating or pooling. We illustrate separating and pooling equilibria in games with two and three discrete bid levels and compare the revenues of the seller from these equilibria to find the optimal bid levels for these cases.

Suggested Citation

  • Ricardo Gonçalves & Indrajit Ray, 2024. "Revenue implications of choosing discrete bid levels in a Japanese–English auction," Review of Economic Design, Springer;Society for Economic Design, vol. 28(1), pages 125-150, February.
    • Handle: RePEc:spr:reecde:v:28:y:2024:i:1:d:10.1007_s10058-023-00337-7
    DOI: 10.1007/s10058-023-00337-7
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    References listed on IDEAS

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    More about this item

    Keywords

    Japanese–English auctions; Wallet game; Discrete bids; Partitions; Pooling equilibrium; Separating equilibrium; Seller’s revenue;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions

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