Multidimensional Private Value Auctions

Hanming Fang and Stephen Morris

Chapter 9 in Robust Mechanism Design:The Role of Private Information and Higher Order Beliefs, 2012, pp 319-356 from World Scientific Publishing Co. Pte. Ltd.

Abstract: AbstractWe consider parametric examples of symmetric two-bidder private value auctions in which each bidder observes her own private valuation as well as noisy signals about her opponent’s private valuation. We show that, in such environments, the revenue equivalence between the first and second price auctions (SPAs) breaks down and there is no definite revenue ranking; while the SPA is always efficient allocatively, the first price auction (FPA) may be inefficient; equilibria may fail to exist for the FPA. We also show that auction mechanisms provide different incentives for bidders to acquire costly information about opponents’ valuation. ©2004 Elsevier Inc. All rights reserved.

Keywords: Mechanism Design; Game Theory; Auction Theory; Implementation; Private Information; First and Higher-Order Belief; BayesNash Equilibrium; Ex Post Equilibrium; Rationalizability; Vickrey-Clarke-Groves Mechanisms; Private Value; Interdependent Value; Common Value; Belief-Free Mechanisms (search for similar items in EconPapers)
JEL-codes: C70 D0 (search for similar items in EconPapers)
Date: 2012
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Related works:
Journal Article: Multidimensional private value auctions (2006)
Working Paper: Multidimensional Private Value Auctions (2004)
Working Paper: Multidimensional Private Value Auctions (2004)
Working Paper: Multidimensional Private Value Auctions (2004)
Working Paper: Multidimensional Private Value Auctions (2003)
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