Equilibria in second-price auctions with private participation costs

Xiaoyong Cao, Guofu Tan, Guoqiang Tian, Okan Yilankaya

Research output: Contribution to journalArticle

Abstract

We study equilibria in second-price auctions where bidders are independently and privately informed about both their values and participation costs, and where the joint distributions of these values and costs across bidders are not necessarily identical. We show that there always exists an equilibrium in this general setting with two-dimensional types of ex ante heterogeneous bidders. When bidders are ex ante homogeneous, there is a unique symmetric equilibrium, but asymmetric equilibria may also exist. We provide conditions under which the equilibrium is unique (not only among symmetric ones). We find that the marginal density of participation costs and the concentration of values matter for the uniqueness. The presence of private information on participation costs tends to reduce multiplicity of participation equilibria, although multiplicity still persists.

LanguageEnglish
Pages1-19
Number of pages19
JournalEconomic Theory
DOIs
StateAccepted/In press - Jan 2 2017

Fingerprint

Participation costs
Second-price auction
Multiplicity
Joint distribution
Uniqueness
Asymmetric equilibria
Costs
Participation
Private information

Keywords

  • Existence and uniqueness of equilibrium
  • Private participation costs
  • Second-price auctions
  • Two-dimensional types

ASJC Scopus subject areas

  • Economics and Econometrics

Cite this

Equilibria in second-price auctions with private participation costs. / Cao, Xiaoyong; Tan, Guofu; Tian, Guoqiang; Yilankaya, Okan.

In: Economic Theory, 02.01.2017, p. 1-19.

Research output: Contribution to journalArticle

Cao, Xiaoyong ; Tan, Guofu ; Tian, Guoqiang ; Yilankaya, Okan. / Equilibria in second-price auctions with private participation costs. In: Economic Theory. 2017 ; pp. 1-19
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