Multidimensional Private Value Auctions

Hanming Fang and Stephen Morris

No 1423, Cowles Foundation Discussion Papers from Cowles Foundation for Research in Economics, Yale University

Abstract: We consider parametric examples of two-bidder private value auctions in which each bidder observes her own private valuation as well as noisy signals about her opponentÌs private valuation. In such multidimensional private value auction environments, we show that the revenue equivalence between the first and second price auctions breaks down and there is no definite revenue ranking; while the second price auction is always efficient allocatively, the first price auction may be inefficient and the inefficiency may increase as the signal becomes more informative; equilibria may fail to exist for the first price auction. We also show that auction mechanisms provide different incentives for bidders to acquire costly information about opponents' valuation.

Keywords: Multidimensional Auctions; Revenue Equivalence; Allocative Efficiency; Information Acquisition (search for similar items in EconPapers)
JEL-codes: C70 D44 D82 (search for similar items in EconPapers)
Pages: 40 pages
Date: 2003-05
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Published in Journal of Economic Theory (2006), 126: 1-30

Downloads: (external link)
https://cowles.yale.edu/sites/default/files/files/pub/d14/d1423.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found

Related works:
Chapter: Multidimensional Private Value Auctions (2012)
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)
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: https://EconPapers.repec.org/RePEc:cwl:cwldpp:1423

Ordering information: This working paper can be ordered from
Cowles Foundation, Yale University, Box 208281, New Haven, CT 06520-8281 USA
The price is None.

Access Statistics for this paper

More papers in Cowles Foundation Discussion Papers from Cowles Foundation for Research in Economics, Yale University Yale University, Box 208281, New Haven, CT 06520-8281 USA. Contact information at EDIRC.
Bibliographic data for series maintained by Brittany Ladd ().