Comparing first and second price auctions with asymmetric bidders

Mares, Vlad; Swinkels, Jeroen M.

doi:10.1007/s00182-013-0392-8

Cited by 3 publications

(4 citation statements)

References 15 publications

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“…The first two auctions are well known (Mares and Swinkels 2014). In both, the best bidder gets the object, and he has to pay the second highest offer.…”

Section: Auctionsmentioning

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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“…The first two auctions are well known (Mares and Swinkels 2014). In both, the best bidder gets the object, and he has to pay the second highest offer.…”

Section: Auctionsmentioning

confidence: 99%

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

et al. 2022

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“…Consequently, the case of repeated procurement is a natural application of the model. In such a case, I shall show in Section IV that the auctioneer may find it beneficial to commit ex‐ante to reveal the inclination towards its preferred supplier, thus giving a rationale for first‐price handicap procurement auctions (Mares and Swinkels [2014a, 2014b]). Alternatively, the consumer may force firms to compete in long‐term contracts by running a (reverse) auction for the whole sequence of goods to be procured, an aspect studied in Section IV(i).…”

Section: The Baseline Modelmentioning

confidence: 99%

“…The consumer would be better off if she were myopic and could credibly convince both firms at the outset of the game that she is not, since doing so would intensify second‐period competition (note that firms form posterior probabilities based on their perception of how farsighted the consumer is). Alternatively, in the case of repeated procurement, the consumer would be better off if she publicly handicapped one of the firms at the beginning of the game, as in Mares and Swinkels [2014b].…”

Section: Consumer Foresightmentioning

confidence: 99%

“…When one interprets the model as one of repeated procurement auctions with a (hidden) inclination of the auctioneer towards one of the competitors, this gives a rationale for revealing such an inclination before any auction takes place. In other words, this would justify using (first‐price) handicap auctions in procurement (see for instance Mares and Swinkels [2014a, 2014b]).…”

Section: Introductionmentioning

confidence: 99%

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Experimenting to Learn about Demand in Duopoly with Forward‐Looking Consumers

Ruiz‐Aliseda

2019

The J Industrial Economics

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Using a two‐period model, I show that competition between two symmetric duopolists trying to learn about unknown features of demand results in an informationally suboptimal process. Because a firm’s marginal return to price experimentation equals zero if the rival’s price is matched in the first period, myopic symmetric pricing arises in equilibrium even though a firm’s expected second‐period profit attains a local minimum. Furthermore, forward‐looking consumers suffer from ratcheting because their first‐period purchase decisions partly reveal their preferences, which exacerbates the informational suboptimality of the firms’ experimentation process without affecting their pricing. The role of firm asymmetries is also analyzed.

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