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Title: On the lowest-winning-bid and the highest-losing-bid auctions
Authors: Mezzetti, Claudio
Tsetlin, Ilia
First Published: Dec-2006
Publisher: Dept. of Economics, University of Leicester
Abstract: Theoretical models of multi-unit, uniform-price auctions assume that the price is given by the highest losing bid. In practice, however, the price is usually given by the lowest winning bid. We derive the equilibrium bidding function of the lowest-winning-bid auction when there are k objects for sale and n bidders, and prove that it converges to the bidding function of the highest-losing-bid auction if and only if the number of losers n 􀀀 k gets large. When the number of losers grows large, the bidding functions converge at a linear rate and the prices in the two auctions converge in probability to the expected value of an object to the marginal winner.
Series/Report no.: Papers in Economics
Type: Report
Appears in Collections:Reports, Dept. of Economics

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