Optimal auctions with simultaneous and costly participation

Gorkem Celik, Okan Yilankaya

Research output: Contribution to journalArticle

11 Citations (Scopus)

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 languageEnglish
Article number24
JournalB.E. Journal of Theoretical Economics
Volume9
Issue number1
Publication statusPublished - 2009
Externally publishedYes

Fingerprint

Participation
Optimal auction
Seller
Independent private values
Asymmetric equilibria
Participation costs
Profit
Second-price auction
Asymmetry
Auctions

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 journalArticle

@article{2adf5f86b88142939555d6033bd7aff5,
title = "Optimal auctions with simultaneous and costly participation",
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.",
keywords = "Asymmetry, Bidding preferences, Endogenous entry, Optimal auctions, Participation costs",
author = "Gorkem Celik and Okan Yilankaya",
year = "2009",
language = "English",
volume = "9",
journal = "B.E. Journal of Theoretical Economics",
issn = "1935-1704",
publisher = "Berkeley Electronic Press",
number = "1",

}

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

VL - 9

JO - B.E. Journal of Theoretical Economics

JF - B.E. Journal of Theoretical Economics

SN - 1935-1704

IS - 1

M1 - 24

ER -