Ordering Sellers in Sequential Auctions

Posted: 6 Mar 2011 Last revised: 15 Mar 2014

See all articles by Qiang Gong

Qiang Gong

Peking University

Xu Tan

University of Washington - Economics

Yiqing Xing

Johns Hopkins University - Carey Business School

Date Written: October 28, 2011

Abstract

We examine how buyers’ behaviors, sellers’ profits and the social welfare (the total surplus of all sellers and buyers) vary with the order of sellers in sequential auctions where sellers have different reservation values. First, when reserve prices are exogenously set to be sellers’ reservation values, a social planner would order sellers from low to high based on their reservation values, which yields a uniquely efficient order that maximizes the social welfare. However, an auctioneer charged with maximizing the total profit of all sellers would want to reverse the increasing order in certain situations. Second, when reserve prices can be endogenously selected in addition to the order of sellers, the auctioneer would always want to adopt the increasing order for the optimally chosen reserve prices. Sequential auctions with optimally chosen reserve prices and an increasing order are shown optimal among the class of voluntary and incentive-compatible mechanisms.

Keywords: Sequential Auctions, Efficiency, Order, Reserve Prices

JEL Classification: D44, D82

Suggested Citation

Gong, Qiang and Tan, Xu and Xing, Yiqing, Ordering Sellers in Sequential Auctions (October 28, 2011). Review of Economic Design, Vol. 18, No. 1, 2014, Available at SSRN: https://ssrn.com/abstract=1775356 or http://dx.doi.org/10.2139/ssrn.1775356

Qiang Gong

Peking University ( email )

No. 38 Xueyuan Road
Haidian District
Beijing, Beijing 100871
China

Xu Tan (Contact Author)

University of Washington - Economics ( email )

Seattle, WA
United States

Yiqing Xing

Johns Hopkins University - Carey Business School ( email )

100 International Drive
Baltimore, MD 21202
United States

HOME PAGE: http://yiqingxing.com

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