Pre-auction offers in asymmetric first-price and second-price auctions |
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Authors: | Ren Kirkegaard Per Baltzer Overgaard |
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Institution: | aBrock University, Canada;bUniversity of Aarhus, Denmark |
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Abstract: | We consider first-price and second-price auctions with asymmetric buyers, and examine whether pre-auction offers to a subset of buyers are profitable. A single offer is never profitable prior to a second-price auction, but may be profitable prior to a first-price auction. However, a sequence of offers is profitable in either type of auction. In our model, suitably chosen pre-auction offers work because they move the assignment when bidder valuations are “near the top” closer to the optimal, revenue-maximizing assignment. |
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Keywords: | First-price and second-price auctions Asymmetric bidders Pre-auction offers |
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