Additional Information Increases Uncertainty in the Securities Market: Using both Laboratory and fMRI Experiments

Yamaji, Hidetoshi; Gotoh, Masatoshi; Yamakawa, Yoshinori

doi:10.1007/s10614-015-9532-5

Cited by 1 publication

(1 citation statement)

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“…The classical auction model, known as benchmark model, is based on four principal assumptions: the buyers are risk neutral (An et al 2011;Holt 1980); buyers' values are independent and private (Winkler and Brooks 1980;Yamaji et al 2016); the buyers are symmetric (Gayle and Richard 2008); and the payment is a function of the bids alone (see Boyer and Brorsen 2014;Wolfstetter 1996 for more details and other additional technical assumptions). The benchmark model is adopted in this paper for theoretical results.…”

Section: Introductionmentioning

confidence: 99%

Auctions: A New Method for Selling Objects with Bimodal Density Functions

et al. 2022

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In this paper we define a new auction, called the Draw auction. It is based on the implementation of a draw when a minimum price of sale is not reached. We find that a Bayesian Nash equilibrium is reached in the Draw auction when each player bids his true personal valuation of the object. Furthermore, we show that the expected profit for the seller in the Draw auction is greater than in second-price auctions, with or without minimum price of sale. We make this affirmation for objects whose valuation can be modeled as a bimodal density function in which the first mode is much greater than the second one. Regarding the Myerson auction, we show that the expected profit for the seller in the Draw auction is nearly as good as the expected profit in the optimal auction, with the difference that our method is much more simple to implement than Myerson’s one. All these results are shown by computational tests, for whose development we have defined an algorithm to calculate Myerson auction.

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