When and why not to auction

Colin Campbell and Dan Levin ()

Economic Theory, 2006, vol. 27, issue 3, 583-596

Abstract: Standard auctions are known to be a revenue-maximizing way to sell an object under broad conditions when buyers are symmetric and have independent private valuations. We show that when buyers have interdependent valuations, auctions may lose their advantage, even if symmetry and independence of information are maintained. In particular, simple alternative selling mechanisms that sometimes allow a buyer who does not have the highest valuation to win the object will in general increase all buyers’ willingness to pay, possibly enough to offset the loss to the seller of not always selling to the buyer with the greatest willingness to pay. Copyright Springer-Verlag Berlin/Heidelberg 2006

Keywords: Auctions; Posted prices; Interdependencies; Adverse selection. (search for similar items in EconPapers)
Date: 2006
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Citations: View citations in EconPapers (29)

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DOI: 10.1007/s00199-004-0558-5

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