Unraveling of value-rankings in auctions with resale (Q6587054)

In this paper, the author considers the following two features in single-unit auctions: (a) value-rankings are revealed to the bidders, and (b) there are resale markets. The main findings of the article are as follows:\N\N\begin{itemize}\N\item[A] Presuming existence of equilibria, the perfect Bayesian equilibria is characterized by a boundary value problem.\N\item[B] The low-type bidder produces a stronger bid distribution than the high-type bidder, i.e., the ex-ante probability of winning the object is more for the low-type bidder.\N\item[C] Revelation of value-rankings in auctions with resale asymmetrizes the bidding strategies.\N\item[D] The high-type bidder increases his bid if the probability distribution of low-type bidder improves stochastically.\N\item[E] For a special family of probability distributions, the first-price auction is revenue superior to the second-price auction.\N\end{itemize}\N\NThe proofs of the Propositions 1--4 and Theorems 1--5 are given in the Appendix.