Sequential vs. Uniform Common-value Auctions

We study a unit-demand, common-value, affiliated-signals auction model with two objects. We derive symmetric equilibrium for the sequential second-price auction, with and without revelation of the first-round winning bid. We demonstrate that auctioning objects in sequence generates a lowballing effect that reduces first-round revenue. Thus, revenue is greater in a single-round uniform auction for two objects than in a sequential auction with no bid announcement. When the first-round winning bid is announced, there are also two informational effects: a positive effect on second-round price and an ambiguous effect on first-round price. First-round revenue could be greater or smaller than with no bid announcement, and greater or smaller than the price in a uniform auction. As a result, total revenue in a sequential auction with winning-bid announcement could be greater or smaller than in a uniform auction.