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Efficiency of Lowest-Unmatched Price Auctions

Eichberger, J and Vinogradov, D (2016) 'Efficiency of Lowest-Unmatched Price Auctions.' Economics Letters, 141. 98 - 102. ISSN 0165-1765

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Abstract

© 2016 Elsevier B.V. In Lowest-Unmatched Price Auctions (LUPA) all participants pay a bidding fee and the lowest bid placed by only one participant wins. Many LUPAs do not specify what happens with the item on offer if there is no unmatched bid. The item may remain with the auctioneer which may appear unfair given that the auctioneer collects the bidding fees. We show that in a symmetric Nash equilibrium of a LUPA with known prize both players and the auctioneer will have an expected profit of zero. Moreover, LUPAs may be seen as a value-revealing mechanism.

Item Type: Article
Subjects: H Social Sciences > HG Finance
Divisions: Faculty of Social Sciences > Essex Business School
Depositing User: Jim Jamieson
Date Deposited: 26 Feb 2016 14:57
Last Modified: 19 Dec 2018 22:16
URI: http://repository.essex.ac.uk/id/eprint/16153

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