Economics at your fingertips  

Asymmetric first price auctions

Rene Kirkegaard ()

Journal of Economic Theory, 2009, vol. 144, issue 4, 1617-1635

Abstract: A new approach to asymmetric first price auctions is proposed which circumvents the need to examine bidding strategies directly. Specifically, the ratio of bidders' (endogenous) payoffs is analyzed and compared to the ratio of the (exogenous) distribution functions that describe beliefs. Most of the results are inferred from this comparison. In the existing theoretical literature, assumptions of first order stochastic dominance or stronger imply that the latter ratio has very specific properties, but no such assumptions are imposed here. It is proven that first order stochastic dominance is necessary for bidding strategies not to cross. When this assumption is relaxed in the numerical literature it is done in a manner that leads to exactly one crossing. However, it is straightforward to construct examples with several crossings. Finally, bid distributions will cross in auctions with two bidders whenever second order (but not first order) stochastic dominance applies.

Keywords: Asymmetric; auctions; First; price; auctions (search for similar items in EconPapers)
Date: 2009
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (26) Track citations by RSS feed

Downloads: (external link)
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Access Statistics for this article

Journal of Economic Theory is currently edited by A. Lizzeri and K. Shell

More articles in Journal of Economic Theory from Elsevier
Bibliographic data for series maintained by Nithya Sathishkumar ().

Page updated 2021-04-04
Handle: RePEc:eee:jetheo:v:144:y:2009:i:4:p:1617-1635