Auctions with asymmetric common-values: The first-price format

• Authors: Mª Angeles De Frutos and Xavier Jarque.
• BSE Working Paper: 146 | September 15
• Keywords: Common-value auctions , asymmetric bidders , spectrum auctions
• JEL codes: D44, D82, T96, G34
• Common-value auctions
• asymmetric bidders
• spectrum auctions

We study the performance of the first-price format in auctions with asymmetric common-values. We show that, contrary to the result for second price auctions, a small advantage for one player translates only to small changes in bidders’ strategies, and the equilibrium remains close to the first-price equilibrium of the original game. We characterize the equilibrium bidding strategies and their behavior as the degree of asymmetry increases. Finally, we compare the revenues at the optimal auction, the first price auction and the second price auction.