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ABSTRACT

This paper compares the sequential and simultaneous auctions for the following scenario. There are multiple similar objects for sale, each object is sold in a separate auction, and each bidder needs only one object. We use English auction rules and first determine equilibrium bidding strategies for the simultaneous and sequential cases. We do this for both common and private value objects by treating a bidder's information about these values as uncertain. We then consider the case where the private and common values have a uniform distribution and compare the two mechanisms in terms of three key properties: a bidder's ex-ante expected profit, the auctioneer's expected cumulative revenue, and the total expected surplus. For both common and private value objects, our study shows the following result. The expected cumulative revenue and the expected total surplus is higher for the sequential mechanism. However, a bidder's ex-ante expected profit depends on the number of objects being auctioned and the number of participating bidders, and it is sometimes higher for the sequential mechanism and sometimes for the simultaneous one.

REFERENCES

• 1: D. Bernhardt and D. Scoones, A note on sequential auctions, American Economic Review, 84(3):653--657, 1994.
• 2: R.Engelbrecht-Wiggans and R. J. Weber, An example of a multi-object auction game, Management Science, 25(12):1272--1277, 1979.
• 3: Shaheen Fatima , Michael Wooldridge , Nicholas R. Jennings, Sequential auctions for objects with common and private values, Proceedings of the fourth international joint conference on Autonomous agents and multiagent systems, July 25-29, 2005, The Netherlands [doi>10.1145/1082473.1082570]
• 4: J. K. Goeree and T. Offerman, Competitive bidding in auctions with private and common values, The Economic Journal 113(489):598--613, 2003.
• 5: A. Ortega-Reichert, Models of competitive bidding under uncertainty, Stanford University Technical Repeort, 8, 1968.
• 6: W. Vickrey, Counterspeculation, auctions and competitive sealed tenders, Journal of Finance 16:8--37, 1961.

INDEX TERMS

Primary Classification:
  I. Computing Methodologies
  I.2 ARTIFICIAL INTELLIGENCE
        I.2.11 Distributed Artificial Intelligence

Additional Classification:
  K. Computing Milieux
  K.4 COMPUTERS AND SOCIETY
      K.4.4 Electronic Commerce

General Terms:
Algorithms, Design, Economics

Keywords:
auctions, game-theory, multi-object auctions