Multiple equilibria in asymmetric first-price auctions
Maskin and Riley (2003) and Lebrun (2006) prove that the Bayes-Nash equilibrium of �rst-price auctions is unique. This uniqueness requires the assumption that a buyer never bids above his value. We demonstrate that, in asymmetric �rst-price auctions (with or without a minimum bid), the relaxation of this assumption results in additional equilibria that are "substantial." Although in each of these additional equilibria no buyer wins with a bids above his value, the allocation of the object and the selling price may vary among the equilibria. Furthermore, we show that such phenomena can only occur under asymmetry in the distributions of values.
|Date of creation:||21 Nov 2011|
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Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems
116, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
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