Auctions in which losers set the price

Claudio Mezzetti and Ilia Tsetlin

Games and Economic Behavior, 2009, vol. 66, issue 2, 855-864

Abstract: We study auctions of a single asset 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. If rationing is allowed, with shares of the asset rationed among the t highest bidders, then the (t+1)st price auction yields the lowest revenue among all auctions with rationing in which only the winners pay and the unit price only depends on the losers' bids. Finally, we compute bidding functions and revenue of the kth price auction, with and without rationing, for an illustrative example much used in the experimental literature to study first-price, second-price and English auctions.

Keywords: Auctions; Second-price; auction; English; auction; kth; price; auction; Affiliated; values; Rationing; Robust; mechanism; design (search for similar items in EconPapers)
Date: 2009
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Working Paper: Auctions in which Losers Set the Price (2008)
Working Paper: Auctions in which Losers Set the Price (2008)
Working Paper: Auctions in which Losers Set the Price (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:gamebe:v:66:y:2009:i:2:p:855-864

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