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dc.contributor.authorHarstad, Ronald M.eng
dc.date.issued2005eng
dc.description.abstractPotential bidders respond to a seller's choice of auction mechanism for a common-value or affiliated-values asset by endogenous decisions whether to incur a participation cost (and observe a private signal), or forego competing. Privately informed participants decide whether to incur a bid-preparation cost and pay an entry fee, or cease competing. Auction rules and information flows are quite general; participation decisions may be simultaneous or sequential. The resulting revenue identity for any auction mechanism implies that optimal auctions are allocatively efficient; a nontrivial reserve price is revenue-inferior for any common-value auction. Optimal auctions are otherwise contentless: any auction that sells without reserve becomes optimal by adjusting any one of the continuous, spanning parameters, e.g., the entry fee. Seller's surplus-extracting tools are now substitutes, not complements. Many econometric studies of auction markets are seen to be flawed in their identification of the number of bidders.eng
dc.identifier.citationDepartment of Economics, 2005eng
dc.identifier.urihttp://hdl.handle.net/10355/2623eng
dc.publisherDepartment of Economicseng
dc.relation.ispartofEconomics publicationseng
dc.relation.ispartofcommunityUniversity of Missouri-Columbia. College of Arts and Sciences. Department of Economicseng
dc.relation.ispartofseriesWorking papers (Department of Economics);WP 05-18eng
dc.source.urihttp://economics.missouri.edu/working-papers/2005/wp0518_harstad.pdfeng
dc.subjectoptimal auctionseng
dc.subjectendegenous bidder participationeng
dc.subjectaffiliated-valueseng
dc.subjectcommon-value auctionseng
dc.subjectsurplus-extracting deviceseng
dc.subject.lcshAuctions -- Econometric modelseng
dc.titleRational Participation Revolutionizes Auction Theoryeng
dc.typeWorking Papereng


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