A BEJTE Advances article.

Abstract

We study the optimal auction problem with participation costs in the symmetric independent private values setting, where bidders know their valuations when they make independent participation decisions. After characterizing the optimal auction in terms of participation cutoffs, we provide an example where it is asymmetric. We then investigate when the optimal auction will be symmetric/asymmetric and the nature of possible asymmetries. We also show that, under some conditions, the seller obtains her maximal profit in an (asymmetric) equilibrium of an anonymous second price auction. In general, the seller can also use non-anonymous auctions that resemble the ones that are actually observed in practice.

Submitted: September 21, 2008 · Accepted: May 8, 2009 · Published: July 30, 2009

Recommended Citation

Celik, Gorkem and Yilankaya, Okan (2009) "Optimal Auctions with Simultaneous and Costly Participation," The B.E. Journal of Theoretical Economics: Vol. 9 : Iss. 1 (Advances), Article 24.
DOI: 10.2202/1935-1704.1522
Available at: http://www.bepress.com/bejte/vol9/iss1/art24