Monotonicity in asymmetric first-price auctions with affiliation

Journal Article (Journal Article)

I study monotonicity of equilibrium strategies in first-price auctions with asymmetric bidders, risk aversion, affiliated types, and interdependent values. Every mixed-strategy equilibrium is shown to be outcome-equivalent to a monotone pure-strategy equilibrium under the "priority rule" for breaking ties. This provides a missing link to establish uniqueness in the "general symmetric model" of Milgrom and Weber (Econometrica 50:1089-1122, 1982). Non-monotone equilibria can exist under the "coin-flip rule" but they are distinguishable: all non-monotone equilibria have positive probability of ties whereas all monotone equilibria have zero probability of ties. This provides a justification for the standard empirical practice of restricting attention to monotone strategies. © Springer Verlag 2007.

Full Text

Duke Authors

Cited Authors

  • McAdams, D

Published Date

  • February 1, 2007

Published In

Volume / Issue

  • 35 / 3

Start / End Page

  • 427 - 453

International Standard Serial Number (ISSN)

  • 0020-7276

Digital Object Identifier (DOI)

  • 10.1007/s00182-006-0038-1

Citation Source

  • Scopus