Multi-Object Auctions: Sequential vs. Simultaneous Sales

TLDR

The choice between sequential and simultaneous auctions for multiple objects is debated, with concerns about information disclosure and deception effects. The authors model the trade‑off between information and deception using a two‑signal framework where bidders may underbid to conceal value. The study finds that information effects can raise revenue in sequential auctions, but deception and the winner’s curse can sometimes make simultaneous sales preferable, so the optimal format depends on which effect dominates.

Abstract

Would a seller prefer to sell multiple objects through sequential or simultaneous auctions? Sequential auctions with bids announced between sales seem preferable because the bids may convey information about the value of objects to be sold later. The auction literature shows that this information effect increases the seller’s expected revenue. However, there is also a deception effect which develops in the sequential sales. If a bidder knows that his current bid will reveal information about later objects then he has an incentive to underbid. These two opposing effects are studied in a two-signal model. The results show that either effect may dominate the other, leading the seller to sometimes prefer simultaneous sales and to sometimes prefer sequential sales. The winner's curse can explain this ordering.