Low-Revenue Equilibria in Simultaneous Ascending-Bid Auctions

Richard Engelbrecht-Wiggans () and Charles Kahn
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Richard Engelbrecht-Wiggans: Department of Business Administration, University of Illinois at Urbana-Champaign, Champaign, Illinois 61820

Management Science, 2005, vol. 51, issue 3, 508-518

Abstract: Low-revenue equilibria allow participants in an auction to obtain goods at prices lower than would prevail in a competitive market. These outcomes are generated as perfect equilibria of ascending-bid, multiunit auctions. We show that these equilibria are possible under mild conditions---conditions that are likely to prevail in many situations where auction formats have recently been adopted. We argue that these equilibria could explain the low revenues of some recent auctions, and discuss potential remedies to eliminate low-revenue equilibria.

Keywords: auctions; bidding; collusion (search for similar items in EconPapers)
Date: 2005
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Citations: View citations in EconPapers (24)

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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:51:y:2005:i:3:p:508-518

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