Endogenous Entry to - Security-Bid Auctions

• 成果类型: Article
• 署名作者: Sogo, Takeharu; Bernhardt, Dan; Liu, Tingjun
• 署名单位: University of Illinois System; University of Illinois Urbana-Champaign; University of Warwick; University of Hong Kong; Renmin University of China
• 刊物名称: AMERICAN ECONOMIC REVIEW
• ISSN/ISSBN: 0002-8282
• DOI: 10.1257/aer.20151538
• 发表日期: 2016
• 页码: 3577-3589
• 关键词: contingent payments; DESIGN

摘要

We endogenize entry to a security-bid auction, where participation is costly and bidders must decide given their private valuations whether to participate. We first consider any minimum reserve security-bid of a fixed expected value that weakly exceeds the asset's value when retained by the seller. DeMarzo, Kremer, and Skrzypacz (2005) establish that with a fixed number of bidders, auctions with steeper securities yield the seller more revenues. Counterintuitively, we find that auctions with steeper securities also attract more entry, further enhancing the revenues from such auctions. We then establish that with optimal reserve securities, auctions with steeper securities always yield higher expected revenues.