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The B.E. Journal of Theoretical Economics

Editor-in-Chief: Schipper, Burkhard

Ed. by Cervellati, Matteo / Fong, Yuk-fai / Peeters, Ronald / Puzzello , Daniela / Rivas, Javier

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Optimal Auctions with Endogenous Entry

Lixin Ye1

1The Ohio State University,

Citation Information: Contributions in Theoretical Economics. Volume 4, Issue 1, ISSN (Online) 1534-5971, DOI: 10.2202/1534-5971.1158, October 2004

Publication History

Published Online:
2004-10-28

We consider a single object, independent private value auction model with entry. Potential bidders are ex ante symmetric and randomize about entry. After entry, each bidder incurs a cost, then learns her private value and a set of signals that may lead to updated beliefs about other entrants' valuations. It is shown that the Vickrey auction with free entry maximizes the expected revenue. Furthermore, if the information potentially available to bidders after entry is sufficiently rich, then the Vickrey auction, up to its equivalent class, is also the only optimal sealed-bid auction.

Keywords: Auctions; Vickrey auction; robust mechanism design; efficient entry; complete classes

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