scholarly journals IDENTIFICATION AND ESTIMATION IN A THIRD-PRICE AUCTION MODEL

2019 ◽  
Vol 36 (3) ◽  
pp. 386-409
Author(s):  
Andreea Enache ◽  
Jean-Pierre Florens
Keyword(s):  
Risk Aversion ◽  
Surprising Result ◽  
The Third ◽  
Transaction Prices ◽  
Sealed Bid ◽  
Private Values ◽  
Price Auction ◽  
Global Identification ◽  
Auction Format ◽  
Auction Model

The first novelty of this paper is that we show global identification of the private values distribution in a sealed-bid third-price auction model using a fully nonparametric methodology. The second novelty of the paper comes from the study of the identification and estimation of the model using a quantile approach. We consider an i.i.d. private values environment with risk-averse bidders. In the first place, we consider the case where the risk-aversion parameter is known. We show that the speed of convergence in process of our nonparametric estimator produces at the root-n parametric rate, and we explain the intuition behind this apparently surprising result. Next, we consider that the risk-aversion parameter is unknown, and we locally identify it using exogenous variation in the number of participants. We extend our procedure to the case where we observe only the bids corresponding to the transaction prices, and we generalize the model so as to account for the presence of exogenous variables. The methodological toolbox used to analyse identification of the third-price auction model can be employed in the study of other games of incomplete information. Our results are interesting, also from a policy perspective, as some authors recommend the use of the third-price auction format for certain Internet auctions. Moreover, we contribute to the econometric literature on auctions using a quantile approach.

scholarly journals Using Field Experiments to Test Equivalence Between Auction Formats: Magic on the Internet

1999 ◽  
Vol 89 (5) ◽  
pp. 1063-1080 ◽  
Author(s):  
David Lucking-Reiley
Keyword(s):  
Theoretical Prediction ◽  
Field Experiments ◽  
The Internet ◽  
English Auctions ◽  
Dutch Auction ◽  
Sealed Bid ◽  
Laboratory Results ◽  
Price Auction ◽  
Auction Format ◽  
Auction Formats

William Vickrey's predicted equivalences between first-price sealed-bid and Dutch auctions, and between second-price sealed-bid and English auctions, are tested using field experiments that auctioned off collectible trading cards over the Internet. The results indicate that the Dutch auction produces 30-percent higher revenues than the first-price auction format, a violation of the theoretical prediction and a reversal of previous laboratory results, and that the English and second-price formats produce roughly equivalent revenues. (JEL C93, D44)

scholarly journals A First-Price Sealed-Bid Asymmetric Auction When Two Bidders Have Respective CRRA and General Utility Functions

2021 ◽  
Vol 2021 ◽  
pp. 1-15
Author(s):  
Mingming Gong ◽  
Shulin Liu
Keyword(s):  
Risk Aversion ◽  
Utility Function ◽  
Existence And Uniqueness ◽  
Allocative Efficiency ◽  
Relative Risk Aversion ◽  
General Utility ◽  
Sealed Bid ◽  
Concave Utility Function ◽  
Asymmetric Auction ◽  
Price Auction

We study a first-price auction with two bidders where one bidder is characterized by a constant relative risk aversion utility function (i.e., a concave power function) while the other has a general concave utility function. We establish the existence and uniqueness of the optimal strategic markups and analyze the effects of one bidder’s risk aversion level on the optimal strategic markups of him and his opponent’s, the allocative efficiency of the auction, and the seller’s expected revenue, respectively.

scholarly journals An Efficient Ascending-Bid Auction for Multiple Objects

2004 ◽  
Vol 94 (5) ◽  
pp. 1452-1475 ◽  
Author(s):  
Lawrence M Ausubel
Keyword(s):  
Privacy Preservation ◽  
Winner's Curse ◽  
Multiple Objects ◽  
Vickrey Auction ◽  
Treasury Bills ◽  
Winner’S Curse ◽  
Sealed Bid ◽  
Interdependent Values ◽  
Private Values ◽  
Current Price

When bidders exhibit multi-unit demands, standard auction methods generally yield inefficient outcomes. This article proposes a new ascending-bid auction for homogeneous goods, such as Treasury bills or telecommunications spectrum. The auctioneer announces a price and bidders respond with quantities. Items are awarded at the current price whenever they are “clinched,” and the price is incremented until the market clears. With private values, this (dynamic) auction yields the same outcome as the (sealed-bid) Vickrey auction, but has advantages of simplicity and privacy preservation. With interdependent values, this auction may retain efficiency, whereas the Vickrey auction suffers from a generalized Winner's Curse.

scholarly journals On the ratifiability of efficient cartel mechanisms in first-price auctions with participation costs and information leakage

2019 ◽  
Author(s):  
Xiaoyong Cao ◽  
Shao-Chieh Hsueh ◽  
Guoqiang Tian
Keyword(s):  
Information Leakage ◽  
Sealed Bid ◽  
Price Auction ◽  
Participation Costs

Abstract This paper addresses the ratifiability of an efficient cartel mechanism in a first-price auction. When a seller uses a first-price sealed-bid auction, the efficient all-inclusive cartel mechanism will no longer be ratifiable in the presence of both participation costs and potential information leakage. A bidder whose value is higher than a cut-off in the cartel will have an incentive to leave the cartel, thereby sending a credible signal of his high value, which discourages other bidders from participating in the seller’s auction. However, the cartel mechanism is still ratifiable where either the participation cost or information leakage is absent.

WELFARE LOSS IN LINEAR PRICE-PREFERENCE PROCUREMENT AUCTIONS

2007 ◽  
Vol 09 (04) ◽  
pp. 719-730
Author(s):  
WINSTON T. H. KOH
Keyword(s):  
Uniform Distribution ◽  
Upper Bound ◽  
Government Procurement ◽  
Welfare Loss ◽  
Procurement Auctions ◽  
Domestic Firms ◽  
Sealed Bid ◽  
Non Linear ◽  
Price Auction

In government procurement auctions, discrimination in favor of one group of participants (e.g. domestic firms, minority bidders) over another group is a common practice. The optimal discriminatory rules for these auctions are typically non-linear and could be administratively complex and costly to implement. In practice, procurement auctions are usually organized as sealed-bid first-price auction with a simple percentage price-preference policy. In this paper, we analyze a model with two bidders that draw their costs from a common uniform distribution, and derive an upper bound to the welfare loss resulting from the use of linear-price preference auctions.

An Analysis of Protectionist First-Price Auctions

1993 ◽  
Vol 37 (1) ◽  
pp. 21-30
Author(s):  
Winston T. H. Koh
Keyword(s):  
Foreign Firm ◽  
Consumer Surplus ◽  
Government Procurement ◽  
Knowing That ◽  
Sealed Bid ◽  
Government Project ◽  
Price Auction ◽  
Second Price Auction ◽  
The Government ◽  
Sealed Bid Auctions

The paper considers the following problem: One local firm and one foreign firm, each risk-neutral, bid to supply a government project, each knowing its cost, and knowing that the rival's cost is independently uniform on [0,1]. The government wishes to maximise the local surplus, defined as the sum of consumer surplus and the local firm's profit. The paper analyses the equilibrium bid strategies for the protectionist first-price auction, and shows that the protectionist first-price auction generates a larger local surplus compared with the protectionist second-price auction when rule-of-thumb discrimination is practised. The result provides another reason for the prevalence of sealed-bid auctions in government procurement.

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