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Declining Valuations in Sequential Auctions

Author

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  • Thomas Kittsteiner

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  • Jorg Nikutta
  • Eyal Winter

Abstract

We analyze an independent private values model where a number of objects are sold in sequential first- and second-price auctions. Bidders have unit demand and their valuation for an object is decreasing in the rank number of the auction in which it is sold. We derive efficient equilibria if prices are announced after each auction or if no information is given to bidders. We show that the sequence of prices constitutes a supermartingale. Even if we correct for the decrease in valuations for objects sold in later auctions we find that average prices are declining.

Suggested Citation

  • Thomas Kittsteiner & Jorg Nikutta & Eyal Winter, 2004. "Declining Valuations in Sequential Auctions," Discussion Paper Series dp385, The Federmann Center for the Study of Rationality, the Hebrew University, Jerusalem.
  • Handle: RePEc:huj:dispap:dp385
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    Cited by:

    1. Bruno Larue & Mohamed Jeddy & Sébastien Pouliot, 2013. "On the Number of Bidders and Auction Performance: when More Means Less," Cahiers de recherche CREATE 2013-4, CREATE.
    2. Said, Maher, 2012. "Auctions with dynamic populations: Efficiency and revenue maximization," Journal of Economic Theory, Elsevier, vol. 147(6), pages 2419-2438.
    3. Muramoto, Akitoshi & Sano, Ryuji, 2016. "Sequential auctions of heterogeneous objects," Economics Letters, Elsevier, vol. 149(C), pages 49-51.
    4. Paul Schweinzer, 2008. "Labour market recruiting with intermediaries," Review of Economic Design, Springer;Society for Economic Design, vol. 12(2), pages 119-127, June.
    5. Schweinzer, Paul, 2006. "Labour market screening with intermediaries," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 138, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
    6. Kannan, Karthik N., 2010. "Declining prices in sequential auctions with complete revelation of bids," Economics Letters, Elsevier, vol. 108(1), pages 49-51, July.
    7. Said, Maher, 2008. "Information Revelation and Random Entry in Sequential Ascending Auctions," MPRA Paper 7160, University Library of Munich, Germany.

    More about this item

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions

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