Optimal seller order boosts profits and social welfare in auctions.
The article explores how the order of sellers in sequential auctions affects buyers' behaviors, sellers' profits, and overall social welfare. When sellers have different reservation values, a social planner would ideally order sellers from low to high based on their reservation values to maximize social welfare. However, an auctioneer aiming to maximize sellers' profits may want to reverse this order in certain cases. Additionally, when reserve prices can be chosen along with the order of sellers, an increasing order is optimal for maximizing profits. Overall, sequential auctions with optimally chosen reserve prices and an increasing order are shown to be the best among various auction mechanisms.