A First Price Auction with an Arbitrary Number of Asymmetric Bidders

Doni Nicola () and Domenico Menicucci
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Doni Nicola: Dipartimento di Scienze per l’Economia e l’Impresa, Università degli Studi di Firenze, Via delle Pandette 32, I-50127Firenze (FI), Italy

The B.E. Journal of Theoretical Economics, 2019, vol. 19, issue 2, 7

Abstract: We examine an auction setting with private values and n≥2$n\geq 2$ bidders, which differ in the probability to have a low (high) value. We prove that for the first price auction, the equilibrium strategies can be written in closed form and there are gaps in the equilibrium bid distribution of each bidder except the strongest two. Our equilibrium characterization allows to prove that in this setting the seller prefers the second price auction to the first price auction for each n≥2$n\geq 2$.

Keywords: first price auction; asymmetric bidders (search for similar items in EconPapers)
JEL-codes: D44 D82 (search for similar items in EconPapers)
Date: 2019
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DOI: 10.1515/bejte-2018-0105

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