Monotonicity in Asymmetric First-Price Auctions with Affiliation

Download or read book Monotonicity in Asymmetric First-Price Auctions with Affiliation written by David McAdams and published by . This book was released on 2008 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: I study monotonicity of equilibrium strategies in first-price auctions with symmetric bidders, risk-aversion, affiliated types, and interdependent values. I prove that every mixed-strategy equilibrium is outcome equivalent to a monotone pure strategy equilibrium under the priority rule for breaking ties. This provides a missing link to establish uniqueness in Milgrom and Weber (1982)'s general symmetric model. Non-monotone equilibria can exist under the coin-flip rule but they are distinguishable: all non-monotone equilibria have positive probability of ties whereas all monotone equilibria have zero probability of ties. This provides a justification for the standard empirical practice of restricting attention to monotone strategies.