First price auctions: Monotonicity and uniqueness

First price auctions: Monotonicity and uniqueness

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Article ID: iaor20013513
Country: Germany
Volume: 29
Issue: 3
Start Page Number: 413
End Page Number: 432
Publication Date: Jan 2000
Journal: International Journal of Game Theory
Authors:
Keywords: auctions, Nash theory and methods
Abstract:

I study monotonicity and uniqueness of the equilibrium strategies in a two-person first price auction with affiliated signals. Existing results establish uniqueness within the class of non-decreasing bidding strategies. I show that there is an effectively unique Nash equilibrium within the class of piece-wise monotone strategies. The main result is that in equilibrium, the strategies must be strictly increasing within the support of winning bids. This result provides the missing link for the analysis of uniqueness in two-person first price auctions. The analysis applies to asymmetric environments as well and does not require risk neutrality.

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