Bidding Strategies for Multi-object Auctions

Abstract

Sequential and simultaneous auctions are two important mechanisms for buying and selling multiple objects. The bidding behaviour for the former differs from the latter. Given this, a key problem is to find the equilibrium bidding strategies for these two mechanisms. To this end, we analyse the bidding behaviour for the following scenario. There are multiple objects for sale, each object is sold in a separate auction, and each bidder needs only one object. Furthermore, each object has both common and private value components and bidders are uncertain about these values. We first determine the optimal bidding strategies for the simultaneous and sequential cases and show that they form an equilibrium. We do this for the English auction rules, the first-price sealed bid rules, and the second-price sealed bid rules. We then find the equilibrium outcome in terms of auction revenue, auction efficiency, and the winner���s profit.