Procurement Bidding in First-Price and Second-Price Sealed Bid Common Value Auctions

Arbeitspapier

Within the framework of the common value model, we examine the magnitude of the difference in expected outcome between first-price and second-price sealed bid auctions. The study is limited to two empirical specifications of bidders’ signals: Weibull and normal distribution. The optimal bid functions and the expected procurer’s cost under both auction formats are derived. Simulations are undertaken to analyze the impact that random draws of signals have on the differences in outcome from the two auction formats. Using estimates from structural estimation in previous empirical work on first-price auction data, where Weibull and normal distributions of signals have been applied, the hypothetical expected gain from switching from a first-price sealed bid auction to a second-price sealed bid auction mechanism is computed.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Working Paper ; No. 1999:17

Classification and Topics

• Classification: Wirtschaft ; Auctions
• Subject: Common value auctions ; procurement ; Vickrey auction ; Auktionstheorie ; Beschaffung ; Signalling ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Lunander, Anders
• Event: Veröffentlichung
• (who): Uppsala University, Department of Economics
• (where): Uppsala
• (when): 1999

Further information

• Handle: http://hdl.handle.net/10419/82902
• URN: urn:nbn:se:uu:diva-2463
• Last update: 10.03.2025, 11:44 AM CET