We study auctions in which the number of potential bidders is large, such as in Internet auctions. With numerous bidders, the expected revenue and the optimal bid function in a first price auction result in complicated expressions, except for a few simple distribution function for the bidders' valuations. We show that these expressions can be well approximated using extreme value theory without assuming a particular distribution function. The theory is applied to data from Internet auctions.

auctions, extreme values, numerous bidders
Auctions (jel D44)
hdl.handle.net/1765/6590
Tinbergen Institute Discussion Paper Series
Tinbergen Institute

Caserta, S, & de Vries, C.G. (2005). Auctions with Numerous Bidders (No. TI 05-031/2). Tinbergen Institute Discussion Paper Series. Retrieved from http://hdl.handle.net/1765/6590