Resource title

Auctions in which losers set the price

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Resource description

We study auctions of a single object among symmetric bidders with affiliated values. We show that the second-price auction minimizes revenue among all efficient auction mechanisms in which only the winner pays, and the price only depends on the losers' bids. In particular, we show that the kth price auction generates higher revenue than the second-price auction, for all k > 2. It follows that with affiliated private values, the kth price auction yields higher revenue than the English auction. We also show that the kth price auction may generate higher revenue than the English auction even in a setting with common values.

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Resource language

en

Resource content type

application/pdf

Resource resource URL

http://flora.insead.edu/fichiersti_wp/inseadwp2006/2006-46.pdf

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Copyright INSEAD. All rights reserved