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Equilibria in Second Price Auctions with Participation Costs

Guofu Tan and Okan Yilankaya () working papers from Vancouver School of Economics

Abstract: We investigate equilibria of sealed-bid second price auctions with bidder participation costs in the independent private values environment. We focus on equilibria in which bidders use cut-off strategies (bid the valuation if it is greater than a certain cut-off point, otherwise do not participate), since if a bidder finds participating optimal, she cannot do better than bidding her valuation. When the bidders are symmetric, the concavity (respectively, strict convexity) of the c.d.f. from which the valuations are drawn is a sufficient condition for uniqueness (respectively, multiplicity) within this class. We also study a special case with asymmetric bidders and show that concavity/convexity plays a similar role.

Keywords: Second price auctions; participation costs; multiplicity of equilibria (search for similar items in EconPapers)
JEL-codes: C62 C72 D44 D82 (search for similar items in EconPapers)
Pages: 0 pages
Date: 2004-01-24, Revised 2006-06-09
New Economics Papers: this item is included in nep-mic
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Journal Article: Equilibria in second price auctions with participation costs (2006) Downloads
Working Paper: Equilibria in Second Price Auctions with Participation Costs (2005)
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