Open AccessOptimal auction mechanisms with private values
Author(s) -
Dejan Trifunović
Publication year - 2010
Publication title -
economic annals/ekonomski anali
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.148
H-Index - 12
eISSN - 1820-7375
pISSN - 0013-3264
DOI - 10.2298/eka1084071t
Subject(s) - revenue equivalence , common value auction , microeconomics , auction theory , vickrey–clarke–groves auction , english auction , forward auction , revenue , equivalence (formal languages) , generalized second price auction , combinatorial auction , vickrey auction , economics , yield (engineering) , mechanism design , multiunit auction , mathematical economics , mathematics , finance , materials science , discrete mathematics , metallurgy
This paper reviews equilibrium behavior 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 analyze collusive behavior of bidders. The two goals that an auction mechanism has to achieve are efficient allocation and maximization of the seller's expected revenue