Equilibria in Second Price Auctions with Participation Costs
19 Pages Posted: 3 Dec 2003
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: Suggested Citation
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