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Equivalence and revenue comparison among identical-item auctions

Author

Listed:
  • Shuang Xu

    (Huazhong University of Science and Technology)

  • Yong Zhao

    (Huazhong University of Science and Technology)

  • Yeming Gong

    (EMLYON Business School)

Abstract

We compare outcomes of the common identical-item auction formats in an independent private value environment. In single-unit demand cases, discriminatory auctions, uniform-price auctions, sequential auctions with disclosing only the winner’s identity, and sequential auctions with disclosing both the winner’s identity and winning price, are revenue equivalent. The seller’s expected revenue is the lowest in sequential auctions with disclosing all bids due to bidders’ faking behaviors. In multi-unit demand cases, discriminatory auctions generate the highest revenue, followed by sequential auctions with three different information disclosure rules. The seller’s revenue varies from the highest to the lowest in uniform-price auctions owing to the existence of multiple equilibria. Interestingly, we find that with more information disclosed, a bidder’s expected payoff may increase, decrease, or even stay unchanged, which is different from the conventional wisdom “the more information, the better”.

Suggested Citation

  • Shuang Xu & Yong Zhao & Yeming Gong, 2021. "Equivalence and revenue comparison among identical-item auctions," Journal of Economics, Springer, vol. 134(3), pages 261-292, December.
    • Handle: RePEc:kap:jeczfn:v:134:y:2021:i:3:d:10.1007_s00712-021-00746-8
    DOI: 10.1007/s00712-021-00746-8
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    References listed on IDEAS

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    1. Shiying Chen & Zhenhuan Dong & Chunming Cao & Changjun Zheng, 2022. "Strategy and design of multi‐unit auction in grouped asymmetric setting," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(8), pages 3435-3453, December.

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