How Risk Sharing May Enhance Efficiency of English Auctions
Bibliographic Data
| ID | 9719246 |
|---|---|
| Authors | Audrey Hu (0000-0002-0498-9480, Tsinghua University, University of Amsterdam and Tinbergen Institute), Theo Offerman (0000-0002-3469-8334, University of Amsterdam), Liang Zou (0000-0002-7899-3108, University of Amsterdam) |
| Year | 2018 |
| Volume | 128 |
| Issue | 610 |
| Pages | 1235-1256 |
| Publication date | 2018-05-01 |
| Peer Reviewed | Yes |
| Open Access | Yes |
| Type | ARTICLE |
| Venue | The Economic Journal (JOURNAL) |
| Journal identifiers | ISSN: 0013-0133 • E-ISSN: 1468-0297 |
| Publisher | Oxford University Press (OUP) (PUBLISHER) |
| DOI | 10.1111/ecoj.12439 |
| OpenAlex | W3122160789 |
| Language | EN |
| References cited | 32 |
English auctions are known to be ex post efficient under various circumstances. However, they are inefficient ex ante for risk-averse seller and bidders. Our analysis of the English premium auction (EPA) reveals that, while maintaining ex post efficiency, awarding a premium to the highest two bidders makes the auction more attractive to all risk-averse bidders. This result is remarkably general, as it holds with possible interdependent bidder valuations and affiliated types. When bidders exhibit independent types, the EPA can also benefit a risk-averse seller and therefore strictly improve ex ante, or interim, Pareto efficiency of the English auction
Auction theory · Common value auction · Economics · English auction · Expected utility hypothesis · Financial economics · Generalized second-price auction · Microeconomics · Pareto efficiency · Pareto principle · Reservation price · Revenue · Risk aversion (psychology · Set (abstract data type · Verifiable secret sharing · Vickrey auction · Vickrey–Clarke–Groves auction · Auction Theory and Applications · Computer Science · Consumer Market Behavior and Pricing · Experimental Behavioral Economics Studies · Finance
A Theory of Auctions and Competitive Bidding
An Analysis of the Principal-Agent Problem
Increasing risk
Monotone Comparative Statics
Risk Aversion in the Small and in the Large
A Theoretical Basis for 19th-Century Changes to the Port of New York Imported Goods Auction
What Really Matters in Auction Design
| Citation velocity | historical |
|---|---|
| Highly cited | No |