Revenues in discrete multi-unit, common value auctions: a study of three sealed-bid mechanisms
This paper proposes a discrete bidding model for both quantities and pricing. It has a two-unit demand environment where subjects bid for contracts with an unknown redemption value, common to all bidders. Prior to bidding, the bidders receive private signals of information on the (common) value. The relevant task is to compare the equilibrium strategies and the seller’s revenue of the three most common auction formats with two players. The result is that the Vickrey auction always gives the most revenue to the seller, the discriminatory auction follows closely and the uniform auction clearly is the worst due to demand reduction.
KeywordsMulti-Unit auction Common value auction Discrete auction Game theory
JEL ClassificationsC72 D44
- Ausubel, LM (1999) A generelized Vickrey auction. Mimeographed, University of MarylandGoogle Scholar
- Ausubel LM, Crampton PC (2002) Demand reduction and inefficiency in multi-unit auctions. Mimeographed, Department of Economics, University of MarylandGoogle Scholar
- Ausubel LM, Milgrom P (2006) The lovely but lonely Vickrey auction. In: Cramton P, Shoham Y, Steinberg R (eds) Combinatorial auction. MIT, Cambridge, pp 17–40Google Scholar
- Lindén J, Lunander A, Nilsson J-E (1996) Revenues in multi-unit common value auctions—an experimental study of three sealed-bid mechanisms. Mimeographed, Dalarna UniversityGoogle Scholar