HOW RISK SHARING MAY ENHANCE EFFICIENCY OF ENGLISH AUCTIONS

Research output: Journal Publications and Reviews (RGC: 21, 22, 62)21_Publication in refereed journalpeer-review

3 Scopus Citations
View graph of relations

Author(s)

Detail(s)

Original languageEnglish
Pages (from-to)1235–1256
Journal / PublicationEconomic Journal
Volume128
Issue number610
Online published22 Oct 2016
Publication statusPublished - May 2018
Externally publishedYes

Abstract

English auctions are known to be ex post efficient under various circumstances. However, they are inefficient ex ante for risk‐averse seller and bidders. Our analysis of the English premium auction (EPA) reveals that, while maintaining ex post efficiency, awarding a premium to the highest two bidders makes the auction more attractive to all risk‐averse bidders. This result is remarkably general, as it holds with possible interdependent bidder valuations and affiliated types. When bidders exhibit independent types, the EPA can also benefit a risk‐averse seller and therefore strictly improve ex ante, or interim, Pareto efficiency of the English auction.

Citation Format(s)

HOW RISK SHARING MAY ENHANCE EFFICIENCY OF ENGLISH AUCTIONS. / Hu, Audrey; Offerman, Theo; Zou, Liang.

In: Economic Journal, Vol. 128, No. 610, 05.2018, p. 1235–1256.

Research output: Journal Publications and Reviews (RGC: 21, 22, 62)21_Publication in refereed journalpeer-review