Abstract
We study the optimal auction problem with participation costs in the symmetric independent private values setting, where bidders know their valuations when they make independent participation decisions. After characterizing the optimal auction in terms of participation cutoffs, we provide an example where it is asymmetric. We then investigate when the optimal auction will be symmetric/asymmetric and the nature of possible asymmetries. We also show that, under some conditions, the seller obtains her maximal profit in an (asymmetric) equilibrium of an anonymous second price auction. In general, the seller can also use non-anonymous auctions that resemble the ones that are actually observed in practice.
| Original language | English |
|---|---|
| Article number | 24 |
| Journal | B.E. Journal of Theoretical Economics |
| Volume | 9 |
| Issue number | 1 |
| Publication status | Published - 2009 |
| Externally published | Yes |
Fingerprint
Keywords
- Asymmetry
- Bidding preferences
- Endogenous entry
- Optimal auctions
- Participation costs
ASJC Scopus subject areas
- Economics, Econometrics and Finance(all)
Cite this
Optimal auctions with simultaneous and costly participation. / Celik, Gorkem; Yilankaya, Okan.
In: B.E. Journal of Theoretical Economics, Vol. 9, No. 1, 24, 2009.Research output: Contribution to journal › Article
}
TY - JOUR
T1 - Optimal auctions with simultaneous and costly participation
AU - Celik, Gorkem
AU - Yilankaya, Okan
PY - 2009
Y1 - 2009
N2 - We study the optimal auction problem with participation costs in the symmetric independent private values setting, where bidders know their valuations when they make independent participation decisions. After characterizing the optimal auction in terms of participation cutoffs, we provide an example where it is asymmetric. We then investigate when the optimal auction will be symmetric/asymmetric and the nature of possible asymmetries. We also show that, under some conditions, the seller obtains her maximal profit in an (asymmetric) equilibrium of an anonymous second price auction. In general, the seller can also use non-anonymous auctions that resemble the ones that are actually observed in practice.
AB - We study the optimal auction problem with participation costs in the symmetric independent private values setting, where bidders know their valuations when they make independent participation decisions. After characterizing the optimal auction in terms of participation cutoffs, we provide an example where it is asymmetric. We then investigate when the optimal auction will be symmetric/asymmetric and the nature of possible asymmetries. We also show that, under some conditions, the seller obtains her maximal profit in an (asymmetric) equilibrium of an anonymous second price auction. In general, the seller can also use non-anonymous auctions that resemble the ones that are actually observed in practice.
KW - Asymmetry
KW - Bidding preferences
KW - Endogenous entry
KW - Optimal auctions
KW - Participation costs
UR - http://www.scopus.com/inward/record.url?scp=68949145245&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=68949145245&partnerID=8YFLogxK
M3 - Article
AN - SCOPUS:68949145245
VL - 9
JO - B.E. Journal of Theoretical Economics
JF - B.E. Journal of Theoretical Economics
SN - 1935-1704
IS - 1
M1 - 24
ER -