Equilibria in Second Price Auctions with Participation Costs

19 Pages Posted: 3 Dec 2003

See all articles by Guofu Tan

Guofu Tan

University of Southern California - Department of Economics

Okan Yilankaya

University of British Columbia (UBC) - Department of Economics

Date Written: January 2005

Abstract

We investigate equilibria of sealed-bid second price auctions with bidder participation costs in the independent private values environment. We focus on equilibria in cutoff strategies (participate and bid the valuation iff it is greater than the cutoff), since if a bidder finds it optimal to participate, she cannot do better than bidding her valuation. When bidders are symmetric, concavity (strict convexity) of the cumulative distribution function from which the valuations are drawn is a sufficient condition for uniqueness (multiplicity) within this class. We also study a special case with asymmetric bidders and show that concavity/convexity plays a similar role.

JEL Classification: C62, C72, D44, D82

Suggested Citation

Tan, Guofu and Yilankaya, Okan, Equilibria in Second Price Auctions with Participation Costs (January 2005). Available at SSRN: https://ssrn.com/abstract=475602 or http://dx.doi.org/10.2139/ssrn.475602

Guofu Tan (Contact Author)

University of Southern California - Department of Economics ( email )

3620 South Vermont Ave. Kaprielian (KAP) Hall, 300
Los Angeles, CA 90089
United States
213-740-3520 (Phone)

Okan Yilankaya

University of British Columbia (UBC) - Department of Economics ( email )

997-1873 East Mall
Vancouver, BC V6T 1Z1
Canada
604-822-4792 (Phone)
604-822-5915 (Fax)

HOME PAGE: http://www.econ.ubc.ca/yilankaya/homepage.htm

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

Paper statistics

Downloads
155
Abstract Views
2,361
Rank
343,582
PlumX Metrics