Said, Maher (2008): Information Revelation in Sequential Ascending Auctions.
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We examine a model in which buyers with single-unit demand are faced with an infinite sequence of auctions. In each period, a new buyer probabilistically arrives to the market, and is endowed with a constant private value. We demonstrate by way of a simple example the inefficiency of the second-price sealed-bid auction in this setting, and therefore focus instead on the ascending auction.
We then show that the mechanism in which the objects are sold via ascending auctions has an efficient, fully revealing, and Markov perfect Bayesian equilibrium which is ex post optimal for all buyers in each period, given their expectations about the future. In equilibrium, all buyers completely reveal their private information in every period. However, equilibrium bidding behavior is memoryless. Bids depend only upon the information revealed in the current auction, and not on any information revealed in previous periods. This lack of memory is crucial, as it allows buyers to behave symmetrically, despite the informational asymmetry arising from the arrival of uninformed buyers. This provides the appropriate incentives for these new buyers to also reveal their information.
|Item Type:||MPRA Paper|
|Original Title:||Information Revelation in Sequential Ascending Auctions|
|Keywords:||Sequential auctions, Ascending auctions, Random arrivals, Information revelation, Dynamic Vickrey-Clarke-Groves mechanism, Pivotal mechanism, Marginal contribution|
|Subjects:||D - Microeconomics > D4 - Market Structure and Pricing > D44 - Auctions
D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D83 - Search; Learning; Information and Knowledge; Communication; Belief
C - Mathematical and Quantitative Methods > C7 - Game Theory and Bargaining Theory > C73 - Stochastic and Dynamic Games; Evolutionary Games; Repeated Games
|Depositing User:||Maher Said|
|Date Deposited:||31. Oct 2008 06:25|
|Last Modified:||16. Feb 2013 08:18|
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Available Versions of this Item
Information Revelation and Random Entry in Sequential Ascending Auctions. (deposited 15. Feb 2008 00:16)
Information Revelation and Random Entry in Sequential Ascending Auctions. (deposited 15. May 2008 00:15)
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- Information Revelation and Random Entry in Sequential Ascending Auctions. (deposited 15. May 2008 00:15)