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Auctions with asymmetric common-values: The first-price format

Author

Listed:
  • Mª Angeles De Frutos
  • Xavier Jarque
Abstract
We study the performance of the first-price format in auctions with asymmetric common-values. We show that, contrary to the result for second price auctions, a small advantage for one player translates only to small changes in bidders' strategies, and the equilibrium remains close to the first-price equilibrium of the original game. We characterize the equilibrium bidding strategies and their behavior as the degree of asymmetry increases. Finally, we compare the revenues at the optimal auction, the first price auction and the second price auction.

Suggested Citation

  • Mª Angeles De Frutos & Xavier Jarque, 2004. "Auctions with asymmetric common-values: The first-price format," Working Papers 146, Barcelona School of Economics.
    • Handle: RePEc:bge:wpaper:146
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    References listed on IDEAS

    as
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    Cited by:

    1. Jihui Chen & Maochao Xu, 2015. "Asymmetry and revenue in second-price auctions: a majorization approach," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 39(3), pages 625-640, July.

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    More about this item

    Keywords

    Common-value auctions; asymmetric bidders; spectrum auctions;
    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
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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