Revenue comparison: first-price versus English auction under bidder heterogeneity

Determine whether a first-price sealed-bid auction would raise more revenue (i.e., extract more surplus from the winning bidder) than the English auction in the proposed sequential control mechanism when bidders differ in skill or outcome distributions, and characterize efficiency implications under such heterogeneity.

Background

The mechanism uses an English (ascending) auction and argues it is a strong candidate for efficiency and surplus extraction. While first-price auctions can raise more revenue with risk-averse bidders, they may also reduce efficiency.

The authors highlight uncertainty about revenue dominance once realistic heterogeneity among bidders (e.g., differing skill levels) is introduced, noting that known auction results do not unambiguously resolve revenue comparisons in such settings.