Cao, Xiaoyong and Tian, Guoqiang (2007): Second-price Auction with Two-Dimensional Private Information on Values and Participation Costs.
Download (283kB) | Preview
This paper studies equilibria of second price auctions when values and participation costs are both privation information and are drawn from general distribution functions. We consider the existence and uniqueness of equilibrium. It is shown that there always exists an equilibrium for this general economy, and further there exists a unique symmetric equilibrium when all bidders are ex ante homogenous. Moreover, we identify a sufficient condition under which we have a unique equilibrium in a heterogenous economy with two bidders. Our general framework covers many relevant models in the literature as special cases.
|Item Type:||MPRA Paper|
|Original Title:||Second-price Auction with Two-Dimensional Private Information on Values and Participation Costs|
|Keywords:||Two-Dimensional types, Private Values, Private Participation Costs, Second Price Auctions, Existence and Uniqueness of Equilibrium|
|Subjects:||D - Microeconomics > D4 - Market Structure and Pricing > D44 - Auctions
D - Microeconomics > D6 - Welfare Economics > D61 - Allocative Efficiency; Cost-Benefit Analysis
D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D82 - Asymmetric and Private Information; Mechanism Design
C - Mathematical and Quantitative Methods > C7 - Game Theory and Bargaining Theory > C72 - Noncooperative Games
C - Mathematical and Quantitative Methods > C6 - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling > C62 - Existence and Stability Conditions of Equilibrium
|Depositing User:||Guoqiang Tian|
|Date Deposited:||12. Sep 2012 12:54|
|Last Modified:||13. Feb 2013 22:30|
 Blume, A. and Heidhues, P., “All Equilibria of the Vickrey Auction”, Journal of Economic Theory, 114, (2004), 170-177.
 Burton, T.A., Stability and Periodic Solutions of Ordinary and Functional Differential Equations , Academic Press, 1985.
 Campbell, Colin M., “Coordination Auctions with Entry”, Journal of Economic Theory, 82, (1998), 425-450.
 Cao, X. and Tian, G., “Second Price Auctions with Differentiated Participation Costs”, Working Paper, 2008.
 Compte, O., Jehiel, J., 2007. “Auctions and Information Acquisition: Sealed Bid or Dynamic Formats?”. RAND Journal of Economics. 38, 355-372.
 Fudenberg, D. and Tirole, J., Game Theory, The MIT Press, 1991.
 Green, J. and Laffont, J.J, “Participation Constraints in the Vickrey Auction”, Economics Letters, 16, (1984), 31-36.
 Harstad,R., 1990. “Alternative Common Value Auctions Procedure: Revenue Comparisons with Free Entry”. Journal of Political Economy. 98, 421-429.
 Harstad, R.M., Kagel, J.H. and Levin, D., “Equilibrium Bid Functions for Auctions with an Uncertain Number of Bidders”, Economics Letters, 33, (1990), 35-40.
 Jehle, G. A. and Reny, P. J., Advanced Microeconomic Theory (the second edition), University of Chicago, 2001.
 Kaplan, T.R. and Sela, A., “Second Price Auctions with Private Entry Costs”, Working paper, Mar 2006.
 Krishna, V., Auction Theory, Academic Press, 2002.
 Levin, D. and Smith, J.L., “Equilibrium in Auctions with Entry”, American Economic Review, 84, (1994), 585-599.
 McAfee, R.P. and McMillan, J., “Auctions with Entry”, Economics Letters, 23, (1987), 343-347.
 McAfee, R.P. and McMillan, J., “Auctions with a Stochastic Number of Bidders”, Journal of Economic Theory, 43, (1987), 1-19.
 Mills, M., 1993. “Giving Contractors a Break”. Cong. Quart. 51, pp. 2947.
 Persico. P.,“Information Acquisition in Auctions”, Econometrica, 68, (2000), 135-148.
 Samuelson, W.F, “Competitive Bidding with Entry Costs”, Economics Letters, 17, (1985), 53-57.
 Stegeman, M.,“Participation costs and Efficient Auctions”, Journal of Economic Theory, 71, (1996), 228-259.
 Tan, G. and Yilankaya, O., “Equilibria in Second Price Auction with participation Costs”, Journal of Economic Theory, 130, (2006), 205-219.
 Tian, G.,“Micro Economic Theory”, Lecture Notes, Department of Economics, Texas A&M University, March 2006, website: http://econweb.tamu.edu/tian/micro1.pdf.
 Vickrey, W., “Counterspection, Auctions, and Competitive Sealed Tenders”, Journal of Finance, 16, (1961), 8-37.
 Wolfstetter, E., Topics in Microeconomics: Industrial Organization, Auctions, and Incentives, Cambridge University Press, 1999.