Endogenous entry in lowest-unique sealed-bid auctions |
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Authors: | Email author" target="_blank">Harold?HoubaEmail author Dinard?van der?Laan Dirk?Veldhuizen |
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Institution: | (1) Smeal College of Business, Penn State University, 465 Business Building, University Park, PA 16802, USA;(2) Smeal College of Business, Penn State University, 332 Business Building, University Park, PA 16802, USA |
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Abstract: | Lowest-unique sealed-bid auctions are auctions with endogenous participation, costly bids, and the lowest bid among all unique
bids wins. Properties of symmetric NEs are studied. The symmetric NE with the lowest expected gains is the maximin outcome under symmetric strategies, and it is the solution to a mathematical program. Comparative statics for the number
of bidders, the value of the item and the bidding cost are derived. The two bidders’ auction is equivalent to the Hawk–Dove
game. Simulations of replicator dynamics provide numerical evidence that the symmetric NE with the lowest expected gains is
also asymptotically stable. |
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Keywords: | |
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