Affiliation in Multi-Unit Auctions

Research output: Working paper

Abstract / Description of output

We extend Milgrom and Weber?s affiliated valuations model to the multi-unit case with constant marginal valuations where 2 bidders compete for k identical objects. We show that the discriminatory auction has a unique equilibrium, that corresponds to Milgrom and Weber?s firstprice equilibrium. This unique equilibrium therefore leads to lower expected prices than the equilibrium of the English auction where the units are bundled together. Hence we show that in a common value auction of a single object where the object can be divided into k parts, it is not possible to increase revenue by using a multi-unit discriminatory auction. We discuss a possible application to Treasury auctions.
Original languageEnglish
PublisherEdinburgh School of Economics, University of Edinburgh
Publication statusPublished - 2004

Publication series

NameESE Discussion Papers

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