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Which equilibrium yields the highest expected revenue in second-price sealed-bid auctions?

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  • Inami, Yusuke

Abstract

This paper considers second-price sealed-bid auctions among three or more bidders. We take into account all equilibria, and examine the maximum of the equilibrium revenues, using the result of Blume and Heidhues (2004). We show that if an assumption on distributions of bidders’ types holds, then a truth-telling strategy equilibrium brings the highest expected revenue to the seller. When the assumption is violated, however, the truth-telling strategy equilibrium may not be optimal.

Suggested Citation

  • Inami, Yusuke, 2018. "Which equilibrium yields the highest expected revenue in second-price sealed-bid auctions?," Economics Letters, Elsevier, vol. 167(C), pages 97-98.
    • Handle: RePEc:eee:ecolet:v:167:y:2018:i:c:p:97-98
    DOI: 10.1016/j.econlet.2018.03.016
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    1. Blume, Andreas & Heidhues, Paul, 2004. "All equilibria of the Vickrey auction," Journal of Economic Theory, Elsevier, vol. 114(1), pages 170-177, January.
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    Cited by:

    1. Mei, Jie & Chen, Chen & Wang, Jianhui & Kirtley, James L., 2019. "Coalitional game theory based local power exchange algorithm for networked microgrids," Applied Energy, Elsevier, vol. 239(C), pages 133-141.

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    More about this item

    Keywords

    Second-price sealed-bid auction;

    JEL classification:

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

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