Working Paper: CEPR ID: DP4080
Authors: Todd Kaplan; Aner Sela
Abstract: We study auctions where bidders have private information about their entry costs and the seller does not benefit from these entry costs. We consider a symmetric environment where all bidders have the same value for the object being sold, and also an asymmetric environment where bidders may have different valuations for the object. In these environments, the seller?s pay-off as well as the social surplus may either increase or decrease in the number of bidders though not necessarily in the same direction. The auction designs that maximize the social surplus or the seller?s pay-off are analysed.
Keywords: asymmetric auctions; entry costs; symmetric auctions
JEL Codes: D44; O31; O32
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| increase in the number of bidders (D44) | increase in the seller's payoff (D43) |
| increase in the number of bidders (D44) | decrease in social surplus (D69) |
| seller's preference for reducing the number of bidders (D44) | increase in profits (D33) |
| bidder entry costs (D44) | likelihood of participation (J22) |
| entry fees or reserve prices (D44) | influence bidder participation (D44) |