Template-Type: ReDIF-Paper 1.0
Title: Robust Bidding and Revenue in Descending Price Auctions
Author-Name: Sarah Auster
Author-Email: sarah.auster@unibocconi.it
Author-Name: Christian Kellner
Author-Email: c.kellner@soton.ac.uk


Classification-JEL:
Keywords: Auctions, Ambiguity, Consistent Planning

Abstract: We study the properties of Dutch auctions in an independent private value setting,
where bidders face uncertainty over the type distribution of their opponents and evaluate their payoffs by the worst case from a set of probabilistic scenarios. In contrast
to static auction formats, participants in the Dutch auction gradually learn about the
valuations of other bidders. We show that the transmitted information can lead to
changes in the worst-case distribution and thereby shift a bidder’s payoff maximizing
exit price over time. We characterise the equilibrium bidding function in this environment and show that the arriving information leads bidders to exit earlier at higher
prices. As a result, the Dutch auction systematically generates more revenue than the
first-price auction.

Note: 
Length: 42
Creation-Date: 2020-01
Revision-Date: 
File-URL: https://www.crctr224.de/research/discussion-papers/archive/dp146
Handle: RePEc:bon:boncrc:CRCTR224_2020_146