Equilibria in second price auctions with participation costs

Guofu Tan, Okan Yilankaya

Research output: Contribution to journalArticle

34 Citations (Scopus)

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 cutoff strategies (participate and bid the valuation iff it is greater than the cutoff), since if a bidder finds it optimal to participate, she cannot do better than bidding her valuation. When bidders are symmetric, concavity (strict convexity) of the cumulative distribution function from which the valuations are drawn is a sufficient condition for uniqueness (multiplicity) within this class. We also study a special case with asymmetric bidders and show that concavity/convexity plays a similar role.

Original languageEnglish
Pages (from-to)205-219
Number of pages15
JournalJournal of Economic Theory
Volume130
Issue number1
DOIs
Publication statusPublished - Sep 2006
Externally publishedYes

Fingerprint

Participation costs
Second-price auction
Convexity
Concavity
Bid
Uniqueness
Independent private values
Asymmetric bidders
Multiplicity
Bidding
Distribution function

Keywords

  • Entry fee
  • Multiplicity of equilibria
  • Participation cost
  • Second price auctions

ASJC Scopus subject areas

  • Economics and Econometrics

Cite this

Equilibria in second price auctions with participation costs. / Tan, Guofu; Yilankaya, Okan.

In: Journal of Economic Theory, Vol. 130, No. 1, 09.2006, p. 205-219.

Research output: Contribution to journalArticle

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