Simultaneous Pooled Auctions

Flavio Menezes and Paulo Monteiro

The Journal of Real Estate Finance and Economics, 1998, vol. 17, issue 3, 219-32

Abstract: Suppose a seller wants to sell k similar or identical objects and there are n greater than k potential buyers. Suppose that each buyer wants only one object. In this case, we suggest the use of a simultaneous auction that would work as follows. Players are asked to submit sealed bids for one object. The individual with the highest bid chooses an object first; the individual with the second-highest bid chooses the next object; and this process continues until the individual with the kth highest bid receives the last object. Each individual pays the equivalent to his other bid. When objects are identical, we show that the proposed auction generates the same revenue as a first-price sealed-bid sequential auction. When objects are perfectly correlated, there is no known solution for sequential auctions, whereas we can characterize bidding strategies in the proposed auction. Moreover, the proposed auction is optimal (given an appropriately chosen reserve price), and it may be easier and cheaper to run than a sequential auction. Copyright 1998 by Kluwer Academic Publishers

Date: 1998
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Related works:
Working Paper: Simultaneous Ooled Auctions (1996)
Working Paper: Simultaneous Pooled Auctions (1996)
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