Lottery Auctions

28^th October 2014, 13:00 Ashton Lecture Theater
Prof Nicola Dimitri
Department of Economics and Statistics
Universita di Siena
Italy

Abstract

The talk discusses some single object, private value, lottery auctions (LA) with complete information, where the winner is randomly drawn, with a probability proportional to the price bid. Such auctions are similar to commonly used formats of national and charity lotteries (NCL), where the winning probability depends on the number of tickets bought. However, LA differ from NCL since the object value is not endogenously determined by the amount invested by participants but rather is exogenous. For this reason the LA we study are more akin to contests "a là Tullock". In particular, we consider a form of "second price lottery auction". Unlike the standard Vickrey auction, an interesting result in the simplest model with two players is that in the only Nash Equilibrium where both players submit a positive price, bidders may reveal the opponent's value and not their own value. For this reason, we named this "mirror revelation