Decision Sciences
5 years ago

Dutch auctions outperform first-price auctions, generating more revenue consistently.

Journal of Economic Theory
Robust bidding and revenue in descending price auctions
Sarah Auster, Christian Kellner

Paper Summary

Dutch auctions, where prices start high and drop until someone bids, can make more money than other types of auctions. In these auctions, bidders learn about each other's values over time, which can make them leave the auction sooner at higher prices. This means that Dutch auctions can bring in more revenue than auctions where the highest bid wins.

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