On the lowest-winning-bid and the highest-losing-bid auctions
Mezzetti, Claudio and Tsetlin, Ilia. (2008) On the lowest-winning-bid and the highest-losing-bid auctions. Journal of Mathematical Economics, Vol.44 (No.9-10). pp. 1040-1048. ISSN 0304-4068Full text not available from this repository.
Official URL: http://dx.doi.org/10.1016/j.jmateco.2007.12.001
Theoretical models of multi-unit, uniform-price auctions assume that the price is given by the highest losing bid. In practice, however, the price is usually given by the lowest winning bid. We derive the equilibrium bidding function of the lowest-winning-bid auction when there are k objects for sale and n bidders with unit demand, and prove that it converges to the bidding function of the highest-losing-bid auction if and only if the number of losers n - k gets large. When the number of losers grows large, the bidding functions converge at a linear rate and the prices in the two auctions converge in probability to the expected value of an object to the marginal winner. (C) 2007 Elsevier B.V. All rights reserved.
|Item Type:||Journal Article|
|Subjects:||H Social Sciences > HF Commerce|
|Divisions:||Faculty of Social Sciences > Economics|
|Library of Congress Subject Headings (LCSH):||Auctions -- Mathematical models, Information asymmetry, Game theory, Econometric models|
|Journal or Publication Title:||Journal of Mathematical Economics|
|Official Date:||September 2008|
|Number of Pages:||9|
|Page Range:||pp. 1040-1048|
|Access rights to Published version:||Restricted or Subscription Access|
|Version or Related Resource:||Mezetti, C. and Tsetlin, I. (2007). On the lowest-winning-bid and the highest-losing-bid auctions. [Coventry] : University of Warwick, Economics Department. (Warwick economic research papers, no.832). http://wrap.warwick.ac.uk/id/eprint/1382|
Bikhchandani, S., Riley, J., 1991. Equilibria in open common value auctions. Journal of Economic Theory 53, 101–130.
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