Vickrey Auctions with Sequential and Costly Participation

Guoqiang Tian and Mingjun Xiao

MPRA Paper from University Library of Munich, Germany

Abstract: This paper investigates the cutoff strategies and the effects of sequential and costly participation in Vickrey auctions with independent private value settings. It demonstrates a Stackelberg version of participation decision in auctions, while simultaneous participation can be regarded as a Cournot version in auctions. Buyers adopt cut-off participation strategies. In two-buyer case, the cutoff strategy equilibrium is unique. The follower's critical values are always monotonic in participation cost in both symmetric and asymmetric settings. This is also true for the leader with mild conditions on c.d.fs. We also characterize equilibria in three-buyer and more general n-buyer environments. We then study buyer's preference to be a leader or a follower. Comparison with simultaneous model shows that the driven-out effect is much stronger in our sequential participation model, which implies the simultaneous specification might not be desirable.

Keywords: Sequential Participation; Participation Cost; Second Price Auction (search for similar items in EconPapers)
JEL-codes: C72 D44 D80 (search for similar items in EconPapers)
Date: 2009-01
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Citations: View citations in EconPapers (3)

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