Said, Maher (2008): Information Revelation and Random Entry in Sequential Ascending Auctions.
Download (355Kb) | Preview
We examine a model in which multiple buyers with single-unit demand are faced with an infinite sequence of auctions. New buyers arrive on the market probabilistically, and are each endowed with a constant private value. Moreover, objects also arrive on the market at random times, so the number of competitors and the degree of informational asymmetry among them may vary across from one auction to the next. We demonstrate by way of a simple example the inefficiency of the second-price sealed-bid auction in this setting, and therefore assume that each object is sold via ascending auction.
We then characterize an efficient and fully revealing periodic ex post incentive compatible equilibrium for the game in which the objects are sold via ascending auctions. We show that each buyer's bids and payoffs depend only upon their rank amongst their competitors and the (revealed) values of those with lower values. Furthermore, strategies are memoryless -- bids depend only upon the information revealed in the current auction, and not on any information that may have been revealed in earlier periods. We then demonstrate that the sequential ascending auction serves as an indirect mechanism that is equivalent -- in our setting -- to the dynamic marginal contribution mechanism introduced by Bergemann and Välimäki (2007) and generalized in Cavallo, Parkes, and Singh (2007).
|Item Type:||MPRA Paper|
|Original Title:||Information Revelation and Random Entry 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:||15. May 2008 00:15|
|Last Modified:||28. Feb 2013 09:46|
Bajari, P. and A. Hortaçsu (2003): “The Winner’s Curse, Reserve Prices, and Endogenous Entry: Empirical Insights from eBay Auctions,” The RAND Journal of Economics, 34, 329–355.
Bergemann, D. and J. Välimäki (2007): “Dynamic Marginal Contribution Mechanism,” Cowles Foundation Discussion Paper 1616, Yale University.
Bikhchandani, S., P.A. Haile, and J.G. Riley (2002): “Symmetric Separating Equilibria in English Auctions,” Games and Economic Behavior, 38, 19–27.
Cai, G., P.R. Wurman, and X. Chao (2007): “The Non-Existence of Equilibrium in Sequential Auctions when Bids are Revealed,” Journal of Electronic Commerce Research, 8, 141–156.
Caillaud, B. and C. Mezzetti (2004): “Equilibrium Reserve Prices in Sequential Ascending Auctions,” Journal of Economic Theory, 117, 78–95.
Cavallo, R., D.C. Parkes, and S. Singh (2007): “Efﬁcient Online Mechanisms for Persistent, Periodically Inaccessible Self-Interested Agents,” Unpublished manuscript, Harvard University.
Fuchs, W. and A. Skrzypacz (2007): “Bargaining with Arrival of New Traders,” Unpublished manuscript, Stanford University.
Inderst, R. (2008): “Dynamic Bilateral Bargaining under Private Information with a Sequence of Potential Buyers,” Review of Economic Dynamics, 11, 220–236.
Jeitschko, T. (1998): “Learning in Sequential Auctions,” Southern Economic Journal, 65, 98–112.
Kittsteiner, T., J. Nikutta, and E. Winter (2004): “Declining Valuations in Sequential Auctions,” International Journal of Game Theory, 33, 89–106.
Milgrom, P.R. and R.J. Weber (1982): "A Theory of Auctions and Competitive Bidding," Econometrica, 50, 1089-1122.
Milgrom, P.R. and R.J. Weber (2000): “A Theory of Auctions and Competitive Bidding, II,” in The Economic Theory of Auctions, ed. by P. Klemperer, Cheltenham, UK: Edward Elgar Publishing, vol. 2, 179–194.
Nekipelov, D. (2007): “Entry Deterrence and Learning Prevention on eBay,” Unpublished manuscript, Duke University.
Peters, M. and S. Severinov (2006): “Internet Auctions with Many Traders,” Journal of Economic Theory, 130, 220–245.
Roth, A. and A. Ockenfels (2002): “Last-Minute Bidding and the Rules for Ending Second-Price Auctions: Evidence from eBay and Amazon Auctions on the Internet,” American Economic Review, 94, 1093–1103.
Said, M. (2008): “Sequential Auctions with Random Arrivals,” Unpublished manuscript, Yale University.
Sailer, K. (2006): “Searching the eBay Marketplace,” CESifo Working Paper 1848, University of Munich.
Zeithammer, R. (2006): “Forward-Looking Bidding in Online Auctions,” Journal of Marketing Research, 43, 462–476.
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) [Currently Displayed]