Multidimensional Private Value Auctions

Stephen Morris and Hanming Fang

No 174, Econometric Society 2004 North American Winter Meetings from Econometric Society

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 opponent’s 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 illustrate 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)
Date: 2004-08-11
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Citations: View citations in EconPapers (1)

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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 (2003)
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