Auction Theory, 2nd Edition

15.2 Sequential Second-Price Auctions 221

15.2 SEQUENTIAL SECOND-PRICE AUCTIONS

In this section we amend the model of the previous section so that the K items are

sold using a series of second-price sealed-bid auctions. In all other respects, the

model is the same. In particular, we suppose that, prior to bidding in a particular

auction, the prices in all previous auctions are announced to all. And once again,

we are interested in symmetric equilibrium strategies that are increasing. Instead

of finding the equilibrium strategies directly, however, we will make use of the

revenue equivalence principle.

15.2.1 Revenue Equivalence

If β

II

1

,β

II

2

,..., β

II

K

is a symmetric increasing equilibrium, then, as in the case of

sequential first-price auctions, the K