Bilateral k+1-price auctions with asymmetric shares and values

Cédric Wasser

Games and Economic Behavior, 2013, vol. 82, issue C, 350-368

Abstract: We study a sealed-bid auction between two bidders with asymmetric independent private values. The two bidders own asymmetric shares in a partnership. The higher bidder buys the lower bidderʼs shares at a per-unit price that is a convex combination of the two bids. The weight of the lower bid is denoted by k∈[0,1]. We partially characterize equilibrium strategies and show that they are closely related to equilibrium strategies of two well-studied mechanisms: the double auction between a buyer and a seller and the first-price auction between two buyers (or two sellers). Combining results from those two branches of the literature enables us to prove equilibrium existence. Moreover, we find that there is a continuum of equilibria if k∈(0,1) whereas the equilibrium is unique if k∈{0,1}. Our approach also suggests a procedure for numerical simulations.

Keywords: Asymmetric auctions; Double auction; First-price auction; Partnership dissolution; Detail-free mechanism (search for similar items in EconPapers)
JEL-codes: C72 C78 D44 D82 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:gamebe:v:82:y:2013:i:c:p:350-368

DOI: 10.1016/j.geb.2013.07.014

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