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Auction Theory: A Guide to the Literature
 JOURNAL OF ECONOMIC SURVEYS
, 1999
"... This paper provides an elementary, nontechnical, survey of auction theory, by introducing and describing some of the critical papers in the subject. (The most important of these are reproduced in a companion book, The Economic Theory of Auctions, Paul Klemperer (ed.), Edward Elgar (pub.), forthco ..."
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Cited by 349 (2 self)
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This paper provides an elementary, nontechnical, survey of auction theory, by introducing and describing some of the critical papers in the subject. (The most important of these are reproduced in a companion book, The Economic Theory of Auctions, Paul Klemperer (ed.), Edward Elgar (pub.), forthcoming.) We begin with the most fundamental concepts, and then introduce the basic analysis of optimal auctions, the revenue equivalence theorem, and marginal revenues. Subsequent sections address riskaversion, affiliation, asymmetries, entry, collusion, multiunit auctions, double auctions, royalties, incentive contracts, and other topics. Appendices contain technical details, some simple worked examples, and a bibliography for each section.
Endogenous Entry in FirstPrice Private Value Auctions: the SelfSelection Effect. Working Paper
, 2004
"... This paper studies the e¤ect of endogenous entry in …rstprice private value auctions. Subjects decide, simultaneously, whether to participate in an auction, or to claim an outside option payo ¤ for not participating. At this stage all subjects know the distribution of possible values, the number of ..."
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Cited by 7 (1 self)
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This paper studies the e¤ect of endogenous entry in …rstprice private value auctions. Subjects decide, simultaneously, whether to participate in an auction, or to claim an outside option payo ¤ for not participating. At this stage all subjects know the distribution of possible values, the number of potential entrants, and the amount of the …xed outside option payment. After entry, each participating bidder privately learns his value for the object and the number of bidders and then submits a sealed bid. The symmetric mixedstrategy equilibrium is …rst characterized for homogenous risk preferences. The model is then extended to account for heterogenous risk aversion leading to a pure strategy equilibrium: the selfselection e¤ect. Subjects with higher risk tolerance self select their participation in the auction. There is an equilibrium where all subjects use the same ”cuto¤ ” value of risk tolerance parameter as entry strategy. After entry the bidding is less aggressive, re‡ecting greater risk tolerance of subjects. The selfselection e¤ect becomes stronger with increase in the outside option or the number of potential bidders. The latter result is counter intuitive, as it implies that the selling price may go down when auction is highly advertised.
Revenue Comparisons for Auctions when Bidders Have Arbitrary Types
, 2004
"... This paper develops a methodology for characterizing expected revenue from auctions in which bidders’ types come from an arbitrary distribution. In particular, types may be multidimensional, and there may be mass points in the distribution. One application extends existing revenue equivalence resul ..."
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Cited by 1 (1 self)
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This paper develops a methodology for characterizing expected revenue from auctions in which bidders’ types come from an arbitrary distribution. In particular, types may be multidimensional, and there may be mass points in the distribution. One application extends existing revenue equivalence results. Another application shows that firstprice auctions yield higher expected revenue than secondprice auctions when bidders are risk averse and/or face financial constraints. This revenue ranking also extends to riskaverse bidders with general forms of nonexpected utility preferences.
Oligopoly Price Competition
 in Games and Economic Behavior
, 1994
"... This paper considers a market in which firms have incomplete information about a parameter of other sellers' payoff functions, e.g., a cost parameter. The dispersion of privately observed payoff parameters essentially enables firms to randomize their pricing. As the population distribution of payoff ..."
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This paper considers a market in which firms have incomplete information about a parameter of other sellers' payoff functions, e.g., a cost parameter. The dispersion of privately observed payoff parameters essentially enables firms to randomize their pricing. As the population distribution of payoff parameters collapses to a point, the distribution of purestrategy prices converges to the mixedequilibrium distribution for the limiting completeinformation game. Both symmetric and asymmetric structures are considered.
IIFET 2000 Proceedings Why Fish Auctions Differ – Theory and Practise
"... Abstract. In this paper we will study two auctions for fish found in Norway, and compare them applying auction theoretical assumptions. We will use the revenue equivalence theorem as a basis to explain why these two different auction mechanisms are chosen for the sale of fish. It is shown that the i ..."
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Abstract. In this paper we will study two auctions for fish found in Norway, and compare them applying auction theoretical assumptions. We will use the revenue equivalence theorem as a basis to explain why these two different auction mechanisms are chosen for the sale of fish. It is shown that the issues of risk aversion, common values and inclusion of travel costs may explain the choice of auction institution. Key words: fish auctions, Norway, revenue equivalence 1.
On the Value of Commitment Flexibility in Dynamic Task Allocation via SecondPrice Auctions ABSTRACT
"... Motivated by multiagent systems applications, we study a task allocation problem in a competitive environment with multiple selfinterested autonomous agents. Tasks dynamically arrive to a contractor that oversees the process of task allocation. Tasks are auctioned to contractees, who submit prices ..."
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Motivated by multiagent systems applications, we study a task allocation problem in a competitive environment with multiple selfinterested autonomous agents. Tasks dynamically arrive to a contractor that oversees the process of task allocation. Tasks are auctioned to contractees, who submit prices they require to accept tasks. The agent with the lowest bid wins but is rewarded with the secondlowest price. Each agent, based on his own state, will decide whether to participate in the auction or not, and will decide the bidding price if he chooses to participate. If a busy agent wins a new task, he has to decommit from his current task and pay a decommitment fee. We formulate the problem and derive structural properties of equilibrium strategies. We also provide heuristics that are practical for multiagent system designers. Issues related to system design are discussed in the context of numerical simulations. The contribution is that (a) we provide formal analysis of contractees ’ optimal strategies in a given dynamic task allocation system with commitment flexibility; (b) we study the value of commitment flexibility in the presence of different system parameters.
September 2005Revenue Comparisons for Auctions when Bidders Have Arbitrary Types ∗
, 2005
"... Abstract: This paper develops a methodology for characterizing expected revenue from auctions when bidders ’ types come from an arbitrary distribution. In particular, types may be multidimensional, and there may be mass points in the distribution. One application extends existing revenue equivalence ..."
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Abstract: This paper develops a methodology for characterizing expected revenue from auctions when bidders ’ types come from an arbitrary distribution. In particular, types may be multidimensional, and there may be mass points in the distribution. One application extends existing revenue equivalence results. Another application shows that firstprice auctions yield higher expected revenue than secondprice auctions when bidders are risk averse and face financial constraints. This revenue ranking extends to riskaverse bidders with general forms of nonexpected utility preferences.
Tilburg. Thanks to Benny Moldovanu and Karsten Fieseler for discussion, and to Roberto Burguet,
, 1997
"... In the general symmetric model of Milgrom and Weber, equilibrium bidding is analyzed with a stochastic number of bidders. The equilibrium strategies generalize the known expressions in a coherent way. For the equilibrium bid function of the rst price auction, an interpretation involving 'marginal wi ..."
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In the general symmetric model of Milgrom and Weber, equilibrium bidding is analyzed with a stochastic number of bidders. The equilibrium strategies generalize the known expressions in a coherent way. For the equilibrium bid function of the rst price auction, an interpretation involving 'marginal winning probabilities ' is proposed. With a generalized version of the linkage principle, the wellknown revenue ranking theorems extend to a stochastic number of bidders. As an application, we show that the seller's generically optimal information policy regarding the number of competitors is concealing the information. JEL Classi cation: D44. Earlier versions presented at the University of Mannheim and the 1997 ENTER Jamboree
THE AUSTRALIAN NATIONAL UNIVERSITY WORKING PAPERS IN ECONOMICS AND ECONOMETRICS Hybrid Auctions I: Theory
, 2001
"... In this paper we examine the properties of a hybrid auction that combines a sealed bid and an ascending auction. In this auction, each bidder submits a sealed bid. Once the highest bid is known, the bidder who submitted it is declared the winner if her bid is higher than the second highest by more t ..."
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In this paper we examine the properties of a hybrid auction that combines a sealed bid and an ascending auction. In this auction, each bidder submits a sealed bid. Once the highest bid is known, the bidder who submitted it is declared the winner if her bid is higher than the second highest by more than a predetermined amount or percentage. If at least one more bidder submitted a bid su¢ciently close to the highest bid (that is, if the di¤erence between this bid and the highest bid is smaller than the predetermined amount or percentage) the quali…ed buyers compete in an open ascending auction that has the highest bid of the …rst stage as the reserve price. Quali…ed bidders include not only the highest bidder in the …rst stage but also those who bid close enough to her. We show that this auction generates more revenue than a standard auction. Although this hybrid auction does not generate as much revenue as the optimal auction, it is expost e¢cient.JEL Classi…cation: C72, D44.