2022/11/23 by Sosung Baik, Baik, Sosung, Sung‐Ha Hwang +1
Decision Sciences · Economics, Econometrics and Finance · Social Sciences · #Auction Theory and Applications #Experimental Behavioral Economics Studies #FOS: Economics and business #Law, Economics, and Judicial Systems #Theoretical Economics (econ.TH)
paper · pdf · doi:10.48550/arxiv.2211.12669
openalex publication_date 2022/11/23 · openalex created_date 2025/10/10 · openalex updated_date 2026/07/28
We study the revenue comparison problem of auctions when the seller has a maxmin expected utility preference. The seller holds a set of priors around some reference belief, interpreted as an approximating model of the true probability law or the focal point distribution. We develop a methodology for comparing the revenue performances of auctions: the seller prefers auction X to auction Y if their transfer functions satisfy a weak form of the single-crossing condition. Intuitively, this condition means that a bidder's payment is more negatively associated with the competitor's type in X than in Y. Applying this methodology, we show that when the reference belief is independent and identically distributed (IID) and the bidders are ambiguity neutral, (i) the first-price auction outperforms the second-price and all-pay auctions, and (ii) the second-price and all-pay auctions outperform the war of attrition. Our methodology yields results opposite to those of the Linkage Principle.