scholarly journals Revenue Guarantee Equivalence

2019 ◽  
Vol 109 (5) ◽  
pp. 1911-1929 ◽  
Author(s):  
Dirk Bergemann ◽  
Benjamin Brooks ◽  
Stephen Morris
Keyword(s):  
Lower Bound ◽  
Pure Strategy ◽  
English Auctions ◽  
Revenue Comparison ◽  
Price Auction ◽  
Auction Formats

We revisit the revenue comparison of standard auction formats, including first-price, second-price, and English auctions. We rank auctions according to their revenue guarantees, i.e., the greatest lower bound of revenue across all informational environments, where we hold fixed the distribution of bidders’ values. We conclude that if we restrict attention to the symmetric affiliated models of Milgrom and Weber (1982) and monotonic pure-strategy equilibria, first-price, second-price, and English auctions are revenue guarantee equivalent: they have the same revenue guarantee, which is equal to that of the first-price auction as characterized by Bergemann, Brooks, and Morris (2017). If we consider all equilibria or if we allow more general models of information, then first-price auctions have a greater revenue guarantee than all other auctions considered. (JEL D44, D83)

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)

Auction fever: Rising revenue in second-price auction formats

2015 ◽  
Vol 92 ◽  
pp. 206-227 ◽  
Author(s):  
Karl-Martin Ehrhart ◽  
Marion Ott ◽  
Susanne Abele
Keyword(s):  
Price Auction ◽  
Second Price Auction ◽  
Auction Formats

Channel Auctions

2020 ◽  
Vol 66 (5) ◽  
pp. 2075-2082
Author(s):  
Eduardo M. Azevedo ◽  
David M. Pennock ◽  
Bo Waggoner ◽  
E. Glen Weyl
Keyword(s):  
Lower Bound ◽  
Upper Bound ◽  
Information Acquisition ◽  
Business Strategy ◽  
Equilibrium Price ◽  
Online Auction ◽  
English Auction ◽  
Dutch Auction ◽  
Auction Formats ◽  
Over Time

Standard auction formats feature either an upper bound on the equilibrium price that descends over time (as in the Dutch auction) or a lower bound on the equilibrium price that ascends over time (as in the English auction). We show that in some settings with costly information acquisition, auctions featuring both (viz., a narrowing channel of prices) outperform the standard formats. This Channel auction preserves some of benefits of both the English (truthful revelation) and Dutch (security for necessary information acquisition) auctions. Natural applications include housing, online auction sites like eBay, recording transactions on blockchains, and spectrum rights. This paper was accepted by Joshua Gans, business strategy.

Divisible Good Auctions with Asymmetric Information: An Experimental Examination

2013 ◽  
Vol 48 (4) ◽  
pp. 1271-1300 ◽  
Author(s):  
Emmanuel Morales-Camargo ◽  
Orly Sade ◽  
Charles Schnitzlein ◽  
Jaime F. Zender
Keyword(s):  
Uniform Price Auction ◽  
Bidding Behavior ◽  
Uniform Price ◽  
Common Value ◽  
Symmetric Information ◽  
Price Auction ◽  
Divisible Good Auctions ◽  
Average Revenue ◽  
Auction Formats ◽  
Discriminatory Auctions

AbstractAn experimental approach is used to compare bidding behavior and auction performance in uniform-price and discriminatory auctions when there is incomplete information concerning the common value of the auctioned good. In a symmetric information environment, the different auction formats provide the same average revenue. However, when information is asymmetric the discriminatory auction results in higher average revenue than the uniform-price auction. The volatility of revenue is higher in the uniform-price auctions in all treatments. The results, therefore, provide support for the use of the discriminatory format. Subject characteristics and measures of experience in recent auctions are found to be useful in explaining bidding behavior.

scholarly journals Obviousness around the clock

2021 ◽  
Author(s):  
Yves Breitmoser ◽  
Sebastian Schweighofer-Kodritsch
Keyword(s):  
Mechanism Design ◽  
Behavioral Effect ◽  
Dominant Strategy ◽  
Drop Out ◽  
Behavioral Differences ◽  
Feedback Effects ◽  
Private Values ◽  
Price Auction ◽  
Second Price Auction ◽  
Auction Formats

AbstractLi (Am Econ Rev 107(11):3257–3287, 2017) introduces a theoretical notion of obviousness of a dominant strategy, to be used as a refinement in mechanism design. This notion is supported by experimental evidence that bidding is closer to dominance in the dynamic ascending-clock auction than the static second-price auction (private values), noting that dominance is theoretically obvious in the former but not the latter. We replicate his experimental study and add three intermediate auction formats that decompose the designs’ differences to quantify the cumulative effects of (1) simply seeing an ascending-price clock (after bid submission), (2) bidding dynamically on the clock, and (3) getting (theoretically irrelevant) drop-out information about other bidders. The theory predicts dominance to become obvious through (2), dynamic bidding. We find no significant behavioral effect of (2), however, while the feedback effects (1) and (3) are highly significant. We conclude that behavioral differences between second-price and ascending-clock auctions offer rather limited support for the theory of obviousness and that framing has surprisingly large potential in mechanism design.

scholarly journals Revenue Comparison in Asymmetric Auctions with Discrete Valuations

2013 ◽  
Vol 13 (1) ◽  
pp. 429-461 ◽  
Author(s):  
Nicola Doni ◽  
Domenico Menicucci
Keyword(s):  
The Other ◽  
Unique Equilibrium ◽  
Equilibrium Outcome ◽  
Asymmetric Auctions ◽  
First Order ◽  
Reserve Prices ◽  
Revenue Comparison ◽  
Asymmetric Auction ◽  
Price Auction ◽  
Second Price Auction

AbstractWe consider an asymmetric auction setting with two bidders such that the valuation of each bidder has a binary support. First, we characterize the unique equilibrium outcome in the first price auction for any values of parameters. Then we compare the first price auction with the second price auction in terms of expected revenue. Under the assumption that the probabilities of low values are the same for the two bidders, we obtain two main results: (i) the second price auction yields a higher revenue unless the distribution of a bidder’s valuation first-order stochastically dominates the distribution of the other bidder’s valuation “in a strong sense” and (ii) introducing reserve prices implies that the first price auction is never superior to the second price auction. In addition, in some cases, the revenue in the first price auction decreases when all the valuations increase.

scholarly journals From English to First-Price Sealed Bid: An Empirical Assessment of the Change in Auction Type on Experienced Bidders

2014 ◽  
Vol 14 (2) ◽  
pp. 105-127 ◽  
Author(s):  
Joshua J. Miller
Keyword(s):  
Potential Outcomes ◽  
Model Specification ◽  
Practical Application ◽  
Differential Impact ◽  
Difference Model ◽  
English Auctions ◽  
English Auction ◽  
Sealed Bid ◽  
Price Auction ◽  
Unique Dataset

Abstract This paper estimate the differential impact of first-price sealed-bid (first-price) auctions relative to English auctions on auction revenue. While there is a theoretical literature on the potential outcomes of first-price relative to English auction, there is a paucity of articles that empirically estimate this relationship. The answer to this question is important not only to economists but also those designing auction for practical application. Using a unique dataset from tax lien auctions in Illinois, I empirically test the effect of a switch in auction type from English to first-price. I find auction revenue is greatly increased, by as much as 22 percent, under the first-price auction. The results are supported by a within county difference-in-difference model specification and are robust when restricting the sample across various specifications

scholarly journals Auction theory and a note on game mechanisms

2021 ◽  
Vol 7 (1) ◽  
pp. 43-59
Author(s):  
Dushko Josheski ◽  
Elena Karamazova
Keyword(s):  
Mechanism Design ◽  
Private Information ◽  
Design Theory ◽  
Bilateral Trade ◽  
Incentive Compatibility ◽  
Auction Theory ◽  
General Idea ◽  
Revenue Comparison ◽  
Price Auction ◽  
Second Price Auction

Abstract This paper will review important topics on the subject of auction theory and mechanism design, these include: efficiency first and foremost, also revenue comparison between different types of auctions and the issue of incentive compatibility, individual rationality with the general idea and proof that bilateral trade is inefficient. Mechanism design theory tells us that if buyers and sellers both have private information full efficiency is impossible, however Vickrey auction (single unit auction) will be efficient i.e. will put the goods in the hands of the buyers that value them most. However, the conclusion from this paper is that because of overvaluation of bidders the main result is inefficient, i.e. bids are too high. When weak and strong bidders are compared the main conclusion is that strong bidders’ expected payoff is higher in second price auction (SPA), while weak bidder prefers first price auction (FPA) bid.

scholarly journals Fast Core Pricing for Rich Advertising Auctions

2021 ◽  
Author(s):  
Rad Niazadeh ◽  
Jason Hartline ◽  
Nicole Immorlica ◽  
Mohammad Reza Khani ◽  
Brendan Lucier
Keyword(s):  
Theoretical Study ◽  
Online Advertising ◽  
Combinatorial Algorithm ◽  
Web Advertising ◽  
Welfare Maximization ◽  
Price Auction ◽  
Second Price Auction ◽  
Generalized Second Price Auction ◽  
Auction Formats ◽  
Vcg Auction

Standard ad auction formats do not immediately extend to settings where multiple size configurations and layouts are available to advertisers. In these settings, the sale of web advertising space increasingly resembles a combinatorial auction with complementarities, where truthful auctions such as the Vickrey–Clarke–Groves (VCG) auction can yield unacceptably low revenue. In “Fast Core Pricing for Rich Advertising Auctions,” Niazadeh, Hartline, Immorlica, Khani, and Lucier study and suggest core-selecting auctions, which boost revenue by setting payments so that no group of agents, including the auctioneer, can jointly improve their utilities by switching to a different outcome. Their main result is a combinatorial algorithm that finds an approximate bidder-optimal core point with an almost linear number of calls to the welfare-maximization oracle. This algorithm is faster than previously proposed heuristics in the literature and has theoretical guarantees. By accompanying the theoretical study with an experimental study based on Microsoft Bing Ad Auction data, the authors conclude that core pricing is implementable even for very time-sensitive practical use cases such as real-time online advertising and can yield more revenue than the VCG or generalized second price auction.

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