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Ordering sellers in sequential auctions

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  • Qiang Gong
  • Xu Tan
  • Yiqing Xing

Abstract

We examine how buyers’ behaviors, sellers’ profits and the social welfare (the total surplus of all sellers and buyers) vary with the order of sellers in sequential auctions where sellers have different reservation values. First, when reserve prices are exogenously set to be sellers’ reservation values, a social planner would order sellers from low to high based on their reservation values, which yields a uniquely efficient order that maximizes the social welfare. However, an auctioneer charged with maximizing the total profit of all sellers would want to reverse the increasing order in certain situations. Second, when reserve prices can be endogenously selected in addition to the order of sellers, the auctioneer would always want to adopt the increasing order for the optimally chosen reserve prices. Sequential auctions with optimally chosen reserve prices and an increasing order are shown optimal among the class of voluntary and incentive-compatible mechanisms. Copyright Springer-Verlag Berlin Heidelberg 2014

Suggested Citation

  • Qiang Gong & Xu Tan & Yiqing Xing, 2014. "Ordering sellers in sequential auctions," Review of Economic Design, Springer;Society for Economic Design, vol. 18(1), pages 11-35, March.
  • Handle: RePEc:spr:reecde:v:18:y:2014:i:1:p:11-35
    DOI: 10.1007/s10058-013-0152-z
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    References listed on IDEAS

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    Cited by:

    1. Fanqi Shi & Yiqing Xing, 2022. "Implementing optimal outcomes through sequential auctions," RAND Journal of Economics, RAND Corporation, vol. 53(4), pages 703-732, December.
    2. Ingebretsen Carlson, Jim & Wu, Tingting, 2022. "Shill bidding and information in eBay auctions: A Laboratory study," Journal of Economic Behavior & Organization, Elsevier, vol. 202(C), pages 341-360.

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    More about this item

    Keywords

    Sequential auctions; Efficiency; Optimal mechanism ; Order; Reserve prices; D44; D82;
    All these keywords.

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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