Sequential auctions with heterogeneous bidders
Motivated by empirical findings from jewellery sold at public English auctions at Crédit Municipal de Paris, we study the effect of the presence of two types of bidders on equilibrium strategies and on the price tendency. We consider a second-price auction (sealed-bid og English auction) where bidders are heterogeneous. Some bidders, “professionals”, have multi-unit demand and decreasing marginal utility. Others, “amateurs” are interested in only one object. In an independent private values setting, we characterize an equilibrium when there is one or more professionals and find different price tendencies according to the nature of the demand of amateurs, thus confirming the fact that heterogeneity implies different price matters.
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