Revenue Comparison in Asymmetric Auctions with Discrete Valuations

Nicola Doni () and Domenico Menicucci

No ECO2011/27, Economics Working Papers from European University Institute

Abstract: We consider an asymmetric auction setting with two bidders such that the valuation of each bidder has a binary support. We prove that in this context the second price auction yields a higher expected revenue than the first price auction for a broad set of parameter values, although the opposite result is common in the literature on asymmetric auctions. For instance, the second price auction is superior both when a bidder’s valuation is more uncertain that the valuation of the other bidder, and in case of a not too large distribution shift or rescaling. In addition, we show that in some cases the revenue in the first price auction decreases when all the valuations increase [in doing so, we correct a claim in Maskin and Riley (1985)], and we derive the bidders’ preferences between the two auctions.

Keywords: Asymmetric auctions; First price auctions; Second price auctions (search for similar items in EconPapers)
JEL-codes: D44 D82 (search for similar items in EconPapers)
Date: 2011
New Economics Papers: this item is included in nep-cta and nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://cadmus.eui.eu/bitstream/handle/1814/18355/ECO_2011_27.pdf?sequence=1 main text

Related works:
Journal Article: Revenue Comparison in Asymmetric Auctions with Discrete Valuations (2013)
Working Paper: Revenue Comparison in Asymmetric Auctions with Discrete Valuations (2011)
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:eui:euiwps:eco2011/27

Access Statistics for this paper

More papers in Economics Working Papers from European University Institute Badia Fiesolana, Via dei Roccettini, 9, 50014 San Domenico di Fiesole (FI) Italy. Contact information at EDIRC.
Bibliographic data for series maintained by Cécile Brière ().