PRICES IN SEQUENTIAL AUCTIONS: PRELIMINARY EVIDENCE FROM AUSTRALIAN RARE BOOK AUCTIONS

This paper examines price paths in sequential ascending auctions of identical rare books in Australia. Economic theory is inconclusive but suggests prices in sequential auctions of identical objects should follow flat or rising paths. The empirical literature is in several ways unsatisfactory, but points most commonly to falling price paths. Data from rare book auctions promise to overcome some of the problems in the empirical literature. A preliminary examination of rare book auction data from Australia indicates prices tended to be equal in sequential auctions of identical books in the 1980's and 1990's, and unequal in the 1970's. These results are consistent with the conjecture that more mature auction markets feature flatter price paths in sequential auctions of identical assets. Rare book auctions are a context in which further progress on sequential auctions is likely.

On Some Myths about Sequenced Common-valued Auctions

Equilibria are constructed for classes of game models of sequenced second-price auctions having identical common-valued objects. In some of these the equilibrium price falls on average, and in others the seller loses on average by committing to announce publicly something that he knows. Both of these possibilities are surprisesPublicad

The collusive drawbacks of sequential auctions

Sequential first-price auctions for multiple objects are very common in procurement, electricity, tobacco, timber, and oil lease markets. In this paper we identify two ways in which a sequential format may facilitate collusion among bidders relative to a simultaneous one. The first effect relates to the cartel’s ability to identify and punish defectors within the sequence, thus lowering the gains from a deviation with respect to a simultaneous format. The second effect concerns the cartel’s ability to allocate the bidder with the highest incentive to deviate (the ‘maverick’) to the last object of the sequence, thus increasing the viability of the collusive agreement. We then analyze how the seller may counteract this two effects by limiting the amount of information disclosed to bidders across rounds, and find that partial disclosure policies have little impact on the sustainability of collusion

Sequential vs. Single-Round Uniform-Price Auctions

We study sequential and single-round uniform-price auctions with affiliated values. We derive symmetric equilibrium for the auction in which k1 objects are sold in the first round and k2 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 = k1 + k2 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.Multi-Unit Auctions; Sequential Auctions; Uniform-Price Auction; Affiliated Values; Information Revelation

Sequential vs. Single-Round Uniform-Price Auctions

We study sequential and single-round uniform-price auctions with affiliated values. We derive symmetric equilibrium for the auction in which k1 objects are sold in the first round and k2 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 first-round revenue. Thus, revenue is greater in a single-round, uniform auction for k = k1 + k2 objects than in a sequential uniform auction with no bid announcement. When the first-round winning bids are announced, we also identify two informational effects: a positive effect on second-round price and an ambiguous effect on first-round price. The expected first-round price can be greater or smaller than with no bid announcement, and greater or smaller than the expected price in a single-round uniform auction. As a result, total expected revenue in a sequential uniform auction with winning-bids announcement can be greater or smaller than in a single-round uniform auction.Multi-unit auctions, Sequential auctions, Uniform-price auction, Affiliated values, Information revelation

Dynamic Auctions: A Survey

We survey the recent literature on designing auctions and mechanisms for dynamic settings. Two settings are considered: those with a dynamic population of agents or buyers whose private information remains fixed throughout time; and those with a fixed population of agents or buyers whose private information changes across time. Within each of these settings, we discuss both efficient (welfare-maximizing) and optimal (revenue-maximizing) mechanisms.Dynamic auctions and mechanisms, Random arrivals and departures, Changing private information, Incentive compatibility

Synergies are a reason to prefer first-price auctions!

In this paper we show that in a private value setting first-price auctions can be preferred to second-price auctions. We consider a sequential auction of two objects with positive synergies and compare both auction formats. Although the second-price auction performs better in terms of efficiency and revenue, the first-price auction performs much better on a so far neglected dimension. Namely, the probability that the winner of the first object goes bankrupt is almost always higher when using the second-price rule. Our findings therefore support the common use of first-price auctions, most notably for procurement.industrial organization ;