TY - JOUR
T1 - Dynamic consistency, revelations in auctions and the structure of preferences
AU - Karni, Edi
AU - Safra, Zvi
N1 - Funding Information:
Acknowledgement. Helpful discussions with Chew Soo Hong and comments and suggestions by two referees are gratefully acknowledged. This research was supported by the National Science Foundation under grant #SES87-08360.
PY - 1989/7
Y1 - 1989/7
N2 - 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.
AB - 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.
UR - http://www.scopus.com/inward/record.url?scp=0010015414&partnerID=8YFLogxK
U2 - 10.2307/2297556
DO - 10.2307/2297556
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AN - SCOPUS:0010015414
SN - 0034-6527
VL - 56
SP - 421
EP - 434
JO - Review of Economic Studies
JF - Review of Economic Studies
IS - 3
ER -