Year: 2002
Type: article
Abstract: We analyze equilibrium bidding behavior in a three bidder open ascending bid auction with identity dependent externalities. We prove the existence of a unique symmetric equilibrium and then show that for sufficiently large externalities, the open auction yields strictly higher expected revenues compared to a sealed bid auction. An open auction reveals to bidders more payoff relevant information than a sealed bid auction and as a consequence, bidders are shown to have a higher willingness to pay in the early rounds of an open auction. The open auction is also shown to be more efficient than the sealed bid auction.
Source: The RAND Journal of Economics
DOI: 10.2307/3087481
Author: Gopal das Varma
Institution: Duke University
Language: English
Field: Decision Sciences
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W1579603030