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Optimal Auctions with Simultaneous and Costly Participation

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  • Celik, Gorkem
  • Yilankaya, Okan

Abstract

We study the optimal auction problem with participation costs in the symmetric independent private values setting, where bidders know their valuations when they make independent participation decisions. After characterizing the optimal auction in terms of participation cutoffs, we provide an example where it is asymmetric. We then investigate when the optimal auction will be symmetric/asymmetric and the nature of possible asymmetries. We also show that, under some conditions, the seller obtains her maximal profit in an (asymmetric) equilibrium of an anonymous second price auction. In general, the seller can also use non-anonymous auctions that resemble the ones that are actually observed in practice.

Suggested Citation

  • Celik, Gorkem & Yilankaya, Okan, 2005. "Optimal Auctions with Simultaneous and Costly Participation," Microeconomics.ca working papers celik-05-05-09-03-55-40, Vancouver School of Economics, revised 09 Jun 2006.
  • Handle: RePEc:ubc:pmicro:celik-05-05-09-03-55-40
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    File URL: http://www.econ.ubc.ca/yilankaya/optmech.pdf
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    References listed on IDEAS

    as
    1. Campbell, Colin M., 1998. "Coordination in Auctions with Entry," Journal of Economic Theory, Elsevier, pages 425-450.
    2. Olivier Compte & Philippe Jehiel, 2007. "Auctions and information acquisition: sealed bid or dynamic formats?," RAND Journal of Economics, RAND Corporation, pages 355-372.
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    Cited by:

    1. Hu Luke, 2013. "Optimal Use of Rewards as Commitment Device When Bidding Is Costly," The B.E. Journal of Theoretical Economics, De Gruyter, pages 1-11.
    2. Gorkem Celik & Okan Yilankaya, 2015. "Resale in Second-Price Auctions with Costly Participation," Koç University-TUSIAD Economic Research Forum Working Papers 1501, Koc University-TUSIAD Economic Research Forum.
    3. repec:eee:indorg:v:54:y:2017:i:c:p:148-174 is not listed on IDEAS
    4. Gorkem Celik & Okan Yilankaya, 2016. "Resale in Second-Price Auctions with Costly Participation," Working Papers 1602, Nazarbayev University, Department of Economics, revised Nov 2016.
    5. Arozamena, Leandro & Weinschelbaum, Federico, 2011. "On favoritism in auctions with entry," Economics Letters, Elsevier, pages 265-267.
    6. Bognar, Katalin & Börgers, Tilman & Meyer-ter-Vehn, Moritz, 2010. "An optimal Voting System when Voting is costly," MPRA Paper 29123, University Library of Munich, Germany.
    7. Jehiel, Philippe & Lamy, Laurent, 2014. "On discrimination in procurement auctions," CEPR Discussion Papers 9790, C.E.P.R. Discussion Papers.
    8. Gick, Wolfgang, 2015. "A Theory of Delegated Contracting," Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 113069, Verein für Socialpolitik / German Economic Association.
    9. Hubbard, Timothy P. & Paarsch, Harry J., 2009. "Investigating bid preferences at low-price, sealed-bid auctions with endogenous participation," International Journal of Industrial Organization, Elsevier, pages 1-14.
    10. Yumiko Baba, "undated". "A Note On Dutch Auctions With Time Credits," Working Papers e53, Tokyo Center for Economic Research.
    11. Bognar, Katalin & Börgers, Tilman & Meyer-ter-Vehn, Moritz, 2015. "An optimal voting procedure when voting is costly," Journal of Economic Theory, Elsevier, pages 1056-1073.
    12. Xiaoyong Cao & Guofu Tan & Guoqiang Tian & Okan Yilankaya, 2014. "Equilibria in Second Price Auctions with Private Participation Costs," Koç University-TUSIAD Economic Research Forum Working Papers 1421, Koc University-TUSIAD Economic Research Forum.
    13. Celik, Gorkem & Yilankaya, Okan, 2017. "Resale in second-price auctions with costly participation," International Journal of Industrial Organization, Elsevier, vol. 54(C), pages 148-174.

    More about this item

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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