A measure of the variability of revenue in auctions: A look at the revenue equivalence theorem
type: Item
instance of: scholarly article
title: A measure of the variability of revenue in auctions: A look at the revenue equivalence theorem
zbMATH Open document ID: 1152.91451
DOI: 10.1155/JAMDS/2006/27417
author: Fernando Beltrán
author: Natalia Santamaría
published in: Journal of Applied Mathematics and Decision Sciences
publication date: 2008-11-20T00:00:00Z
review text: Summary: One not-so-intuitive result in auction theory is the revenue equivalence theorem, which states that as long as an auction complies with some conditions, it will on average generate the same revenue to an auctioneer as the revenue generated by any other auction that complies with them. Surprisingly, the conditions are not defined on the payment rules to the bidders but on the fact that the bidders do not bid below a reserve value-set by the auctioneer-the winner is the one with the highest bidding and there is a common equilibrium bidding function used by all bidders. In this paper, we verify such result using extensive simulation of a broad range of auctions and focus on the variability or fluctuations of the results around the average. Such fluctuations are observed and measured in two dimensions for each type of auction: as the number of auctions grows and as the number of bidders increases.
Mathematics Subject Classification ID: 91B26
zbMATH DE Number: 5369130
MaRDI profile type: Publication
cites work: Q4003480
cites work: Q3375660
cites work: Optimal Auction Design
description: scientific article; zbMATH DE number 5369130