Experimental Comparison of First-Price Auction Formats: Sealed-Bid versus Ascending Deadline

2016 ◽  
Author(s):  
Masao Nagatsuka
Keyword(s):  
Experimental Comparison ◽  
Sealed Bid ◽  
Price Auction ◽  
Auction Formats

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 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 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.

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

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 Strategies for Making Best Offers on eBay

2017 ◽  
Vol 14 (3) ◽  
Author(s):  
William Britt ◽  
William Gryc ◽  
Jamie Oliva ◽  
Brittney Tuff ◽  
Charli White
Keyword(s):  
Optimal Strategies ◽  
Bidding Strategy ◽  
Model Risk ◽  
Know How ◽  
Bayesian Nash Equilibrium ◽  
Sealed Bid ◽  
Risk Neutral ◽  
Price Auction ◽  
Equilibrium Bidding ◽  
Best Offer

We model for “Buy-It-Now or Best Offer” auctions on eBay using two different models. In the first model, risk-neutral bidders submit bids in serial and try to surpass a stochastic seller threshold while taking into account how many previous failed bids were made by other bidders. We compute optimal strategies for this model and show that bidder expected surplus decreases in the number of previous failed bids. In the second model we assume bidders do not know how many previous failed bids have been made, and instead use a first-price sealed-bid mechanism with a buy-out price where bidders serially submit bids with the knowledge that no previous bidders have used the buy-out price. We derive a unique equilibrium bidding strategy for risk-neutral bidders in this serial model, show that any equilibrium in a similar parallel bidding model is the same as the equilibrium in the serial model, and compute seller revenue. In particular, under certain circumstances, bidders will bid more in this format than they would in a standard first-price sealed-bid auction, but that a seller maximizes expected revenue by setting a buy-out price higher than any bidder is willing to pay thereby making the auction essentially a first-price auction. KEYWORDS: Auction Theory; eBay; Buy-It-Now or Best Offer; Symmetric Bayesian Nash Equilibrium; Buy-Out Price; First-Price Sealed-Bid

scholarly journals ON THE COMPLETE INFORMATION FIRST-PRICE AUCTION AND ITS INTUITIVE SOLUTION

2011 ◽  
Vol 13 (03) ◽  
pp. 353-361 ◽  
Author(s):  
JOSÉ ALCALDE ◽  
MATTHIAS DAHM
Keyword(s):  
Complete Information ◽  
Grid Size ◽  
Equilibrium Analysis ◽  
High Price ◽  
Price Equilibrium ◽  
Auction Mechanism ◽  
Limiting Equilibrium ◽  
Sealed Bid ◽  
Price Auction ◽  
Theoretical Thinking

Despite the popularity of auction theoretical thinking, it appears that no one has presented an elementary equilibrium analysis of the complete information first-price sealed-bid auction mechanism when the bidding space has a finite grid. This paper aims to remedy that omission. We show that there always exists a "high price equilibrium" which can be considered "the intuitive solution" (an agent with the highest valuation wins the auction bidding at the second highest valuation). Although there might be other "low price equilibria," we also show that when there are two bidders "the intuitive solution" is the unique limiting equilibrium when the grid size goes to zero and ties are randomly broken.

Auctions with an Invitation Cost

2020 ◽  
pp. 2050014
Author(s):  
Erik Ekström ◽  
Carl Lindberg
Keyword(s):  
Nash Equilibrium ◽  
Mixed Strategies ◽  
Common Values ◽  
Sealed Bid ◽  
Price Auction

We consider an auction in which a seller invites potential buyers to a sealed-bid first-price auction, without disclosing to the buyers the number of extended invitations. In the presence of a fixed invitation cost for each invited bidder, the whole auction can be described as a game, where the set of players consists of all bidders together with the seller. In a setting with fully observable common values we show the existence of a Nash equilibrium in mixed strategies. In this equilibrium, the seller should invite precisely one or two potential buyers with certain probabilities, and each invited buyer should place a randomized bid according to a certain distribution.

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