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Sequential vs. single-round uniform-price auctions

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The authors study sequential and single-round uniform-price auctions with affiliated values. They derive symmetric equilibrium for the auction in which k1 objects are sold in the first round and k2 in the second round, with and without revelation of the first-round winning bids. They demonstrate that auctioning objects in sequence generates a lowballing effect that reduces first-round revenues. Thus, revenue is greater in a single-round, uniform auction for k=k1+k2 objects than in a sequential uniform auction with no bid announcement. When the first-round winning bids are announced, they also identify two informational effects: a positive effect on second-round price and an ambiguous effect on first-round price. The expected first-round price can be greater or smaller than with no bid announcement, and greater or smaller than the expected price in a single-round uniform auction. As a result, total expected revenue in a sequential uniform auction with winning-bids announcement can be greater or smaller than in a single-round uniform auction.

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en

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application/pdf

Resource resource URL

http://flora.insead.edu/fichiersti_wp/inseadwp2004/2004-56.pdf

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Copyright INSEAD. All rights reserved