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Considers auctions with non-independent valuations. Equilibrium bidding behaviour in the first price, second price, and English auctions is characterized. Revenue comparisons are given, showing that the revenue equivalence theorem fails for the standard auctions when values are correlated. The linkage principle (price is positively ‘linked’ to information) is described. Finally, full surplus extraction is discussed at length.
Keywords: Affiliated values; first price auction; optimal auctions; second price auction; surplus extraction; the linkage principle; the winners curse
Chapter. 17577 words. Illustrated.
Subjects: Microeconomics
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