Abstract
We study sequential and single-round uniform-price auctions with affiliated values. We derive symmetric equilibrium for the auction in which k 1 objects are sold in the first round and k 2 in the second round, with and without revelation of the first-round winning bids. We demonstrate that auctioning objects in sequence generates a lowballing effect that reduces the first-round price. Total revenue is greater in a single-round, uniform auction for k = k 1 + k 2 objects than in a sequential uniform auction with no bid announcement. When the first-round winning bids are announced, we also identify a positive informational effect on the second-round price. Total expected revenue in a sequential uniform auction with winning-bids announcement may be greater or smaller than in a single-round uniform auction, depending on the model's parameters.
Highlights
Uniform-price auctions are widely used to sell identical, or quite similar, objects
Do sequential sales raise the seller’s revenue, or is revenue maximized in a simultaneous auction? How do equilibrium prices in each round of a sequential auction depend on the information that the seller reveals about bidding in earlier rounds? To address these questions, we suppose that the seller owns k identical objects
While we are the ...rst to study and provide an equilibrium for the sequential, uniform-price auction with winning-bids announcement, the equilibrium of the sequential auction with no bid announcement was conjectured by Milgrom and Weber (2000), ...rst circulated as a working paper in 1982
Summary
Uniform-price auctions are widely used to sell identical, or quite similar, objects. Sometimes sellers auction all objects together in a single round, while other times they auction them separately in a sequence of rounds. While we are the ...rst to study and provide an equilibrium for the sequential, uniform-price auction with winning-bids announcement, the equilibrium of the sequential auction with no bid announcement (when only one object is sold in each round) was conjectured by Milgrom and Weber (2000), ...rst circulated as a working paper in 1982. Because of the combination of the lowballing and the informational e¤ect, total revenue in a sequential uniform auction with winning-bids announcement could be greater or smaller than in a single-round uniform auction. Hausch (1986) studies a special discrete case of a two-bidder, two-unit demand, twosignal, two-period, common-value, sequential ...rst-price auction in which both the losing and the winning bids are announced after the ...rst round.
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