Article
A Note on k-price Auctions with Complete Information When Mixed Strategies are Allowed✩
Economics Letters
(2017)
Abstract
Restricting attention to players who use pure strategies, Tauman (2002) proves that in a k-price auction
(k ≥ 3) for every Nash equilibrium in which no player uses a weakly dominated strategy: (i) the bidder
with the highest value wins the auction and (ii) pays a price higher than the second-highest value among
the players, thereby generating more revenue for the seller than would occur in a first- or secondprice
auction. We show that these results do not necessarily hold when mixed strategies are allowed.
In particular, we construct an equilibrium for k ≥ 4 in which the second-highest valued player wins the
auction and makes an expected payment strictly less than her value. This equilibrium–which exists for
any generic draw of player valuations–involves only one player using a nondegenerate mixed strategy,
for which the amount of mixing can be made arbitrarily small.
©
Keywords
- k-price auction
Disciplines
Publication Date
April, 2017
Citation Information
Jesse A. Schwartz and Timothy Mathews. "A Note on k-price Auctions with Complete Information When Mixed Strategies are Allowed✩" Economics Letters Vol. 153 (2017) p. 6 - 8 Available at: http://works.bepress.com/jesse_schwartz/14/