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Revenue Guarantee Equivalence

Author(s): Bergemann, Dirk; Brooks, Benjamin; Morris, Stephen

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Abstract: 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 are revenue guarantee equivalent: they 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.
Publication Date: May-2019
Citation: Bergemann, Dirk, Brooks, Benjamin, Morris, Stephen. (2019). Revenue Guarantee Equivalence. AMERICAN ECONOMIC REVIEW, 109 (5), 1911 - 1929. doi:10.1257/aer.20180773
DOI: doi:10.1257/aer.20180773
ISSN: 0002-8282
EISSN: 1944-7981
Pages: 1911 - 1929
Type of Material: Journal Article
Journal/Proceeding Title: AMERICAN ECONOMIC REVIEW
Version: Final published version. Article is made available in OAR by the publisher's permission or policy.

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