Varian_Chapter17_Auctions

Varian_Chapter17_Auctions - Chapter Seventeen Auctions Who...

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Chapter Seventeen Auctions
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Who Uses Auctions? Owners of art, cars, stamps, machines, mineral rights etc. Q: Why auction?
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Who Uses Auctions? Owners of art, cars, stamps, machines, mineral rights etc. Q: Why auction? A: Because many markets are imperfect and it is hard to discover potential buyers’ true valuations of your asset. Auctions help to discover this information.
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Types of Auctions English auction: bids are public announcements bid price rises until there are no further bids highest bid wins winner pays his bid.
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Types of Auctions Sealed-bid first-price auction: bids are private information bids are made simultaneously highest bid wins winner pays his bid.
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Types of Auctions Sealed-bid second-price auction: bids are private information bids are made simultaneously highest bidder wins winner pays second-highest bid also known as a Vickrey auction.
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Types of Auctions Dutch auction: auctioneer announces a high bid and then gradually lowers the bid first buyer to accept wins and pays that price.
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Reserve Price A seller specified bid level below which no sale is made.
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Economists’ Classification of Auctions Private-value auctions: every potential buyer knows for sure her own valuation of the item for sale all these individual valuations are independent of each other.
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Economists’ Classification of Auctions Common-value auctions: item for sale has the same value to every potential buyer potential buyers differ in their own estimates of this common value.
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Auction Design Goals: Pareto efficiency maximization of the seller’s profit.
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This note was uploaded on 08/20/2011 for the course ECON 101 taught by Professor Etw during the Spring '11 term at Università di Bologna.

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Varian_Chapter17_Auctions - Chapter Seventeen Auctions Who...

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