Decision Sciences
4 years ago

Losers setting auction prices leads to higher revenue and fairer outcomes

RePEc: Research Papers in Economics
Auctions in which Losers Set the Price
Claudio Mezzetti, Ilia Tsetlin

Paper Summary

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The article explores different auction types where the price is set by the losing bidders. It shows that the second-price auction generates the least revenue among all efficient auctions where only the winner pays. The k-th price auction earns more revenue than the second-price auction for all k greater than 2. Additionally, the (t + 1)-st price auction yields the lowest revenue when rationing is involved. The researchers also calculate bidding functions and revenue for the k-th price auction in a common experimental scenario.