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Equilibria in Second Price Auctions with Private Participation Costs

Listed author(s):
  • Xiaoyong Cao

    ()

    (Department of Economics, University of International Business and Economics, Beijing)

  • Guofu Tan

    ()

    (Department of Economics, University of Southern California)

  • Guoqiang Tian

    ()

    (Department of Economics, Texas A&M University)

  • Okan Yilankaya

    ()

    (Department of Economics, Koc University)

We study equilibria in second price auctions when bidders are independently and privately informed about both their values and participation costs and their joint distributions across bidders are not necessarily identical. We show that there always exists an equilibrium in this general setting with two dimensional types of ex ante heterogeneous bidders. We provide conditions under which the equilibrium is unique. Moreover, when the bidders are ex ante symmetric, we show that there is a unique symmetric equilibrium. We also identify sufficient conditions for existence of asymmetric equilibria.

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File URL: http://eaf.ku.edu.tr/sites/eaf.ku.edu.tr/files/erf_wp_1421.pdf
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Paper provided by Koc University-TUSIAD Economic Research Forum in its series Koç University-TUSIAD Economic Research Forum Working Papers with number 1421.

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Length: 21 pages
Date of creation: Dec 2014
Handle: RePEc:koc:wpaper:1421
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  1. Kaplan, Todd & Sela, Aner, 2003. "Auctions with Private Entry Costs," CEPR Discussion Papers 4080, C.E.P.R. Discussion Papers.
  2. Campbell, Colin M., 1998. "Coordination in Auctions with Entry," Journal of Economic Theory, Elsevier, vol. 82(2), pages 425-450, October.
  3. Tan, Guofu & Yilankaya, Okan, 2006. "Equilibria in second price auctions with participation costs," Journal of Economic Theory, Elsevier, vol. 130(1), pages 205-219, September.
  4. Cao, Xiaoyong & Tian, Guoqiang, 2010. "Equilibria in first price auctions with participation costs," Games and Economic Behavior, Elsevier, vol. 69(2), pages 258-273, July.
  5. Celik Gorkem & Yilankaya Okan, 2009. "Optimal Auctions with Simultaneous and Costly Participation," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 9(1), pages 1-33, July.
  6. Stegeman, Mark, 1996. "Participation Costs and Efficient Auctions," Journal of Economic Theory, Elsevier, vol. 71(1), pages 228-259, October.
  7. Xiaoyong Cao & Guoqiang Tian, 2013. "Second-Price Auctions with Different Participation Costs," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 22(1), pages 184-205, 03.
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