TY - JOUR
T1 - Revenue guarantee equivalence
AU - Bergemann, Dirk
AU - Brooks, Benjamin
AU - Morris, Stephen
N1 - Funding Information:
*Bergemann: Department of Economics, Yale University, Box 208281, New Haven, CT 06520-8281 (email: dirk.bergemann@yale.edu); Brooks: Department of Economics, University of Chicago, 1126 E 59th Street, Chicago, IL 60637 (email: babrooks@uchicago.edu); Morris: Department of Economics, Princeton University, 436 Prospect Avenue, Princeton, NJ 08540 (email: smorris@princeton.edu). Jeffrey Ely was the coeditor for this article. We acknowledge financial support through NSF grant SES 1459899. We would like to thank the coeditor and three anonymous referees for productive suggestions. We are grateful to Christian Baker and Ian Ball for excellent research assistance. We also thank seminar audiences at Stanford University, ESSET 2018, and Western Ontario for helpful comments. The authors declare that they have no relevant or material financial interests that relate to the research described in this paper.
Publisher Copyright:
© 2019 American Economic Association.
PY - 2019/5
Y1 - 2019/5
N2 - We revisit the revenue comparison of standard auction formats, including frst-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 fxed the distribution of bidders' values. We conclude that if we restrict attention to the symmetric affliated models of Milgrom and Weber (1982) and monotonic pure-strategy equilibria, frst-price, second-price, and English auctions are revenue guarantee equivalent: they have the same revenue guarantee, which is equal to that of the frst-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 frst-price auctions have a greater revenue guarantee than all other auctions considered.
AB - We revisit the revenue comparison of standard auction formats, including frst-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 fxed the distribution of bidders' values. We conclude that if we restrict attention to the symmetric affliated models of Milgrom and Weber (1982) and monotonic pure-strategy equilibria, frst-price, second-price, and English auctions are revenue guarantee equivalent: they have the same revenue guarantee, which is equal to that of the frst-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 frst-price auctions have a greater revenue guarantee than all other auctions considered.
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U2 - 10.1257/aer.20180773
DO - 10.1257/aer.20180773
M3 - Review article
AN - SCOPUS:85067128121
SN - 0002-8282
VL - 109
SP - 1911
EP - 1929
JO - American Economic Review
JF - American Economic Review
IS - 5
ER -