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A Note On The Effect Of Asymmetry On Revenue In Second-Price Auctions



    (Faculty of Business Administration, Ono Academic College, Israel; Department of Industrial Engineering and Management, Ben-Gurion University, Israel)



    (Department of Industrial Engineering and Management, Ben-Gurion University, Israel)

We compare the seller's expected revenue in asymmetric second-price auctions with the benchmark case where all bidders have the average distribution. We show that with two bidders, asymmetry has a negative effect on revenue. However, for n > 2 bidders there is no clear observation we can make. We prove that in the case of weak asymmetry, sellers prefer asymmetry over low valuations and symmetry over high valuations. In addition, we show that a good approximation for the expected revenue in the case of weak asymmetry can be obtained by calculating the revenue of the symmetric auction with identical distributions equal to the geometric or arithmetic average.

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Article provided by World Scientific Publishing Co. Pte. Ltd. in its journal International Game Theory Review.

Volume (Year): 14 (2012)
Issue (Month): 03 ()
Pages: 1250019-1-1250019-8

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Handle: RePEc:wsi:igtrxx:v:14:y:2012:i:03:p:1250019-1-1250019-8
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