Revenue Comparison in Asymmetric Auctions with Discrete Valuations

Nicola Doni () and Domenico Menicucci

Working Papers - Economics from Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa

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)
Pages: 32 pages
Date: 2011
New Economics Papers: this item is included in nep-cta
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Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Revenue Comparison in Asymmetric Auctions with Discrete Valuations (2013)
Working Paper: Revenue Comparison in Asymmetric Auctions with Discrete Valuations (2011)
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