Equilibrium in a Family of Common-Value First-Price Auctions with Differential Information

51 Pages Posted: 27 Feb 2006 Last revised: 22 May 2008

See all articles by David A. Malueg

David A. Malueg

University of California Riverside

Ram Orzach

Oakland University - Department of Economics

Date Written: May 12, 2008

Abstract

Equilibrium strategies are explicitly derived for a family of two-bidder common-value first-price auctions in which players have ex ante different information represented by finite partitions of the set of possible values for the object being sold. The distribution of bids for the ex post strong player stochastically dominates that for the ex post weak player. Comparison with the dominance-solvable equilibrium in a second-price auction shows the Milgrom-Weber finding that the second-price auction yields at least as much revenue as the first-price auction fails with asymmetry: in some cases the first-price auction provides greater expected revenue, in some cases less.

Keywords: First-price auction, second-price auction, revenue comparison

JEL Classification: D72

Suggested Citation

Malueg, David A. and Orzach, Ram, Equilibrium in a Family of Common-Value First-Price Auctions with Differential Information (May 12, 2008). Available at SSRN: https://ssrn.com/abstract=885528 or http://dx.doi.org/10.2139/ssrn.885528

David A. Malueg (Contact Author)

University of California Riverside ( email )

Economics Department
3136 Sproul Hall
Riverside, CA 92505
United States
951 827 1494 (Phone)

Ram Orzach

Oakland University - Department of Economics ( email )

Rochester, MI 48309-4401
United States

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
151
Abstract Views
1,126
Rank
350,945
PlumX Metrics