DP12964 Revenue Guarantee Equivalence

Author(s): Dirk Bergemann, Benjamin A Brooks, Stephen Morris
Publication Date: May 2018
Keyword(s): affiliated values, common values, English auction, First-price auction, revenue equivalence, Revenue guarantee, revenue ranking, second-price auction
JEL(s): C72, D44, D82, D83
Programme Areas: Industrial Organization
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=12964

We revisit the revenue comparison of standard auction formats, including first-price, second-price, and English auctions. We rank auctions according to their revenue guarantees, i.e., the greatest lower bound of revenue across all informational environments, where we hold fixed the distribution of bidders' values. We conclude that if we restrict attention to the symmetric affiliated models of Milgrom and Weber (1982) and monotonic pure-strategy equilibria, first-price, second-price, and English auctions all have the same revenue guarantee, which is equal to that of the first-price auction as characterized by Bergemann, Brooks and Morris (2017). If we consider all equilibria or if we allow more general models of information, then first-price auctions have a greater revenue guarantee than all other auctions considered.