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Optimal Auction Mechanisms With Private Values

Author

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  • Dejan Trifunović

Abstract

This paper reviews equilibrium behaviour in different auction mechanisms. We will deal with two types of open auctions, English and Dutch, and two types of sealed-bid auctions, first-price and second-price, when there is a single object for sale and bidders have private values. We show that under certain conditions all four auctions yield the same expected revenue to the seller, but once these assumptions are relaxed revenue equivalence does not hold. We will also study auctions by using standard tools from demand theory.Finally, we will analyse collusive behaviour of bidders. The two goals that an auction mechanism has to achieve are efficient allocation and maximization of the seller’s expected revenue.

Suggested Citation

  • Dejan Trifunović, 2010. "Optimal Auction Mechanisms With Private Values," Economic Annals, Faculty of Economics and Business, University of Belgrade, vol. 55(184), pages 71-112, January –.
    • Handle: RePEc:beo:journl:v:55:y:2010:i:184:p:71-112
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    Cited by:

    1. Dejan Trifunović, 2011. "Single Object Auctions With Interdependent Values," Economic Annals, Faculty of Economics and Business, University of Belgrade, vol. 56(188), pages 125-170, January –.
    2. Stojadinović, Nikola & Bošković, Branislav & Trifunović, Dejan & Janković, Slađana, 2019. "Train path congestion management: Using hybrid auctions for decentralized railway capacity allocation," Transportation Research Part A: Policy and Practice, Elsevier, vol. 129(C), pages 123-139.
    3. Dejan Trifunovic, 2014. "Sequential Auctions And Price Anomalies," Economic Annals, Faculty of Economics and Business, University of Belgrade, vol. 59(200), pages 7-42, January –.

    More about this item

    Keywords

    English auction; Dutch auction; First-price sealed-bid auction; Second-price sealed-bid auction;
    All these keywords.

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions

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