Revenue equivalence revisited

Radosveta Ivanova-Stenzel and Tim Salmon

Games and Economic Behavior, 2008, vol. 64, issue 1, 171-192

Abstract: The conventional wisdom in the auction design literature is that first price sealed bid auctions tend to make more money while ascending auctions tend to be more efficient. We re-examine these issues in an environment in which bidders are allowed to endogenously choose in which auction format to participate. Our findings are that more bidders choose to enter the ascending auction than the first price sealed bid auction and this extra entry is enough to make up the revenue difference between the formats. Consequently, we find that both formats raise approximately the same amount of revenue. They also generate efficiency levels and bidder earnings that are roughly equivalent across mechanisms though the earnings in the ascending might be slightly higher.

Keywords: Bidder; preferences; Private; values; Sealed; bid; auctions; Ascending; auctions; Endogenous; entry (search for similar items in EconPapers)
Date: 2008
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

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Working Paper: Revenue Equivalence Revisited (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:gamebe:v:64:y:2008:i:1:p:171-192

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