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Three Sequential Cases: from Symmetry to Asymmetry

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  • Erwin Amann
  • Heng Qiao

Abstract

Three critical cases, involving asymmetric and symmetric cases, in the sequential stages of the n-player repeated auctions are analyzed and compared. These cases might arise in a process of sequential, identical or equivalent auctions, where the auction result may reveal information about the strength or competitiveness of the participants. The behaviours of different players are characterized. Generally a player bids more aggressively when facing a strong player rather than a weak player. However a player favours competing with a weak one rather than a strong one. By applying the concept of Conditional Stochastic Dominance, revenues of players and the seller between the three stages are compared. It is proved that in this sequential process the information structure of the auctions changes and the seller�s revenue increases. Finally, this n-player asymmetric auction model can also be used to compare the revenues between high-bid and open auctions and especially the results first derived by Maskin and Riley (2000) in two-player case are proved to be valid in the n-player case.

Suggested Citation

  • Erwin Amann & Heng Qiao, 2008. "Three Sequential Cases: from Symmetry to Asymmetry," TWI Research Paper Series 37, Thurgauer Wirtschaftsinstitut, Universität Konstanz.
    • Handle: RePEc:twi:respas:0037
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    References listed on IDEAS

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    1. McAfee, R. Preston & McMillan, John, 1989. "Government procurement and international trade," Journal of International Economics, Elsevier, vol. 26(3-4), pages 291-308, May.
    2. Eric Maskin & John Riley, 2000. "Equilibrium in Sealed High Bid Auctions," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 67(3), pages 439-454.
    3. Maskin, Eric & Riley, John, 2003. "Uniqueness of equilibrium in sealed high-bid auctions," Games and Economic Behavior, Elsevier, vol. 45(2), pages 395-409, November.
    4. Eric Maskin & John Riley, 2000. "Asymmetric Auctions," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 67(3), pages 413-438.
    5. Gradstein, Mark & Konrad, Kai A, 1999. "Orchestrating Rent Seeking Contests," Economic Journal, Royal Economic Society, vol. 109(458), pages 536-545, October.
    6. Richard L. Fullerton & R. Preston McAfee, 1999. "Auctioning Entry into Tournaments," Journal of Political Economy, University of Chicago Press, vol. 107(3), pages 573-605, June.
    7. Riley, John G, 1989. "Expected Revenue from Open and Sealed Bid Auctions," Journal of Economic Perspectives, American Economic Association, vol. 3(3), pages 41-50, Summer.
    8. Roger B. Myerson, 1981. "Optimal Auction Design," Mathematics of Operations Research, INFORMS, vol. 6(1), pages 58-73, February.
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    Keywords

    Asymmetric auction; Revenue comparison;

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