On the Lowest-Winning-Bid and the Highest-Losing-Bid Auctions

Claudio Mezzetti and Ilia Tsetlin
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Ilia Tsetlin: INSEAD

The Warwick Economics Research Paper Series (TWERPS) from University of Warwick, Department of Economics

Abstract: Theoretical models of multi-unit, uniform-price auctions assume that the price is given by the highest losing bid. In practice, however, the price is usually given by the lowest winning bid. We derive the equilibrium bidding function of the lowest-winning-bid auction when there are k objects for sale and n bidders with unit demand, and prove that it converges to the bidding function of the highest-losing-bid auction if and only if the number of losers n - k gets large. When the number of losers grows large, the bidding functions converge at a linear rate and the prices in the two auctions converge in probability to the expected value of an object to the marginal winner.

Keywords: Auctions; Lowest-Winning Bid; Highest-Losing Bid; k-th Price Auction, (k+1)-st; Price Auction (search for similar items in EconPapers)
JEL-codes: D44 D82 (search for similar items in EconPapers)
Pages: 19 pages
Date: 2007
New Economics Papers: this item is included in nep-gth
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Citations: View citations in EconPapers (1)

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https://warwick.ac.uk/fac/soc/economics/research/w ... s/2008/twerp_832.pdf

Related works:
Journal Article: On the lowest-winning-bid and the highest-losing-bid auctions (2008)
Working Paper: On the Lowest-Winning-Bid and the Highest-Losing-Bid Auctions (2007)
Working Paper: On the Lowest-Winning-Bid and the Highest-Losing-Bid Auctions (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:wrk:warwec:832

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