Dynamic consistency, revelations in auctions and the structure of preferences

Edi Karni, Zvi Safra

Research output: Contribution to journalArticlepeer-review

44 Scopus citations


Analyzing the optimal bidding behaviour in ascending-bid auctions and second-price sealed-bid auctions with independent private values, we show that expected utility maximizing behaviour is equivalent to: (a) dynamically consistent bidding in ascending-bid auctions; (b) the equivalence of the optimal bids in ascending-bid auctions and in second-price sealed-bid auctions; (c) bidding the value of the object in second-price sealed-bid auctions. In addition, the optimal bid in ascending-bid auctions equals the value of the object if and only if the bidder’s preferences on lotteries are both quasi-concave and quasi-convex.

Original languageEnglish
Pages (from-to)421-434
Number of pages14
JournalReview of Economic Studies
Issue number3
StatePublished - Jul 1989


FundersFunder number
National Science Foundation#SES87-08360


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