Separating equilibria in auctions with two types of bidders

Arieh Gavious, Yizhaq Minchuk

Research output: Contribution to journalArticlepeer-review

Abstract

We consider two simultaneous, private value, second-price auctions with identical objects for sale and two types of bidders, strong and weak, in the sense of hazard rate stochastic dominance. We show that if the strong bidders are not too strong with respect to the weak bidders, then, by setting an appropriate reserve price, a separating equilibrium exists in which strong bidders will participate in the auction with only strong bidders, and weak bidders will participate in the auction with only weak bidders.

Original languageEnglish
Pages (from-to)69-79
Number of pages11
JournalOptimization Letters
Volume13
Issue number1
DOIs
StatePublished - 8 Feb 2019

Keywords

  • Auctions
  • Selling mechanisms
  • Separating equilibrium

ASJC Scopus subject areas

  • Control and Optimization

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