Expected Revenue from Open and Sealed Bid Auctions

Expected Revenue from Open and Sealed Bid Auctions Abstract The first objective of this paper has been to explain why it is that expected seller revenue is the same under very different auction rules. The second objective has been to explain why revenue equivalence no longer holds once the central assumptions of risk aversion and independence of beliefs are modified. The effect of risk aversion is to make a sealed high bid auction more attractive from a seller's viewpoint. The effect of correlated beliefs is to favor open bidding. Which of the two factors dominates under plausible assumptions about risk aversion parameters and about the degree to which beliefs are correlated remains an important open question. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Economic Perspectives American Economic Association

Expected Revenue from Open and Sealed Bid Auctions

Journal of Economic Perspectives, Volume 3 (3) – Aug 1, 1989

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Publisher
American Economic Association
Copyright
Copyright © 1989 by the American Economic Association
Subject
Symposia
ISSN
0895-3309
D.O.I.
10.1257/jep.3.3.41
Publisher site
See Article on Publisher Site

Abstract

Abstract The first objective of this paper has been to explain why it is that expected seller revenue is the same under very different auction rules. The second objective has been to explain why revenue equivalence no longer holds once the central assumptions of risk aversion and independence of beliefs are modified. The effect of risk aversion is to make a sealed high bid auction more attractive from a seller's viewpoint. The effect of correlated beliefs is to favor open bidding. Which of the two factors dominates under plausible assumptions about risk aversion parameters and about the degree to which beliefs are correlated remains an important open question.

Journal

Journal of Economic PerspectivesAmerican Economic Association

Published: Aug 1, 1989

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