Simultaneous Pooled Auctions

JOURNAL OF REAL ESTATE FINANCE AND ECONOMICS, Volume 17 Issue 3

Posted: 28 May 1998

See all articles by Flavio M. Menezes

Flavio M. Menezes

University of Queensland - School of Economics

Paulo Klinger Monteiro

Getulio Vargas Foundation (FGV) - EPGE

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Abstract

Suppose a seller wants to sell k similar or identical objects and there are n>k potential buyers. Suppose that each buyer wants only one object. In this case, we suggest the use of a simultaneous auction that would work as follows. Players are asked to submit sealed bids for one object. The individual with the highest bid chooses an object first; the individual with the second highest bid chooses the next object; and this process continues until the individual with the kth highest bid receives the last object. Each individual pays the equivalent to his/her bid. When objects are identical, we show that the proposed auction generates the same revenue as a first-price sealed-bid sequential auction. When objects are perfectly correlated, there is no known solution for sequential auctions, whereas we can characterize bidding strategies in the proposed auction. Moreover, the proposed auction is optimal (given an appropriately chosen reserve price) and it may be easier and cheaper to run than a sequential auction.

JEL Classification: D44, R0

Suggested Citation

Menezes, Flavio M. and Monteiro, Paulo Klinger, Simultaneous Pooled Auctions. JOURNAL OF REAL ESTATE FINANCE AND ECONOMICS, Volume 17 Issue 3, Available at SSRN: https://ssrn.com/abstract=92988

Flavio M. Menezes (Contact Author)

University of Queensland - School of Economics ( email )

Brisbane, QLD 4072
Australia

Paulo Klinger Monteiro

Getulio Vargas Foundation (FGV) - EPGE ( email )

sala 1103
Rio de Janeiro RJ, 22250-900
Brazil
+55 21 37995838 (Phone)
+55 21 25538821 (Fax)

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