A note on the effect of asymmetry on revenue in second-price auctions

Arieh Gavious, Yizhaq Minchuk

Research output: Contribution to journalArticlepeer-review

3 Scopus citations

Abstract

We compare the seller's expected revenue in asymmetric second-price auctions with the benchmark case where all bidders have the average distribution. We show that with two bidders, asymmetry has a negative effect on revenue. However, for n > 2 bidders there is no clear observation we can make. We prove that in the case of weak asymmetry, sellers prefer asymmetry over low valuations and symmetry over high valuations. In addition, we show that a good approximation for the expected revenue in the case of weak asymmetry can be obtained by calculating the revenue of the symmetric auction with identical distributions equal to the geometric or arithmetic average.

Original languageEnglish
Article number1250019
JournalInternational Game Theory Review
Volume14
Issue number3
DOIs
StatePublished - 1 Sep 2012

Keywords

  • Second-price auctions
  • asymmetric auctions

ASJC Scopus subject areas

  • Business and International Management
  • Computer Science (all)
  • Statistics, Probability and Uncertainty

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