American Economic Review
ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)
Revenue Guarantee Equivalence
American Economic Review
vol. 109,
no. 5, May 2019
(pp. 1911–29)
Abstract
We revisit the revenue comparison of standard auction formats, including first-price, second-price, and English auctions. We rank auctions according to their revenue guarantees, i.e., the greatest lower bound of revenue across all informational environments, where we hold fixed the distribution of bidders' values. We conclude that if we restrict attention to the symmetric affiliated models of Milgrom and Weber (1982) and monotonic pure-strategy equilibria, first-price, second-price, and English auctions are revenue guarantee equivalent: they have the same revenue guarantee, which is equal to that of the first-price auction as characterized by Bergemann, Brooks, and Morris (2017). If we consider all equilibria or if we allow more general models of information, then first-price auctions have a greater revenue guarantee than all other auctions considered.Citation
Bergemann, Dirk, Benjamin Brooks, and Stephen Morris. 2019. "Revenue Guarantee Equivalence." American Economic Review, 109 (5): 1911–29. DOI: 10.1257/aer.20180773Additional Materials
JEL Classification
- D44 Auctions
- D83 Search; Learning; Information and Knowledge; Communication; Belief; Unawareness