Pure strategy equilibria of single and double auctions with interdependent values
AbstractWe prove the existence of monotonic pure strategy equilibrium for many kinds of asymmetric auctions with n bidders and unitary demands, interdependent values and independent types. The assumptions require monotonicity only in the own bidder's type. The payments can be a function of all bids. Thus, we provide a new equilibrium existence result for asymmetrical double auctions and a small number of bidders. The generality of our setting requires the use of special tie-breaking rules. We present an example of a double auction with interdependent values where all equilibria are trivial, that is, they have zero probability of trade. This is related to Akerlof's "market for lemmons" example and to the "winner's curse," establishing a connection between them. However, we are able to provide sufficient conditions for non-trivial equilibrium existence.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by Elsevier in its journal Games and Economic Behavior.
Volume (Year): 65 (2009)
Issue (Month): 1 (January)
Contact details of provider:
Web page: http://www.elsevier.com/locate/inca/622836
Equilibrium existence in auctions Pure strategy Nash equilibrium Monotonic equilibrium Tie-breaking rule Positive probability of trade Market for lemmons Winners' curse;
Other versions of this item:
- Aloisio Araujo & Luciano I. de Castro, 2006. "Pure Strategy Equilibria Of Single And Double Auctions With Interdependent Values," Economics Working Papers we065320, Universidad Carlos III, Departamento de Economía.
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- William Vickrey, 1961. "Counterspeculation, Auctions, And Competitive Sealed Tenders," Journal of Finance, American Finance Association, vol. 16(1), pages 8-37, 03.
- Maskin, Eric & Riley, John, 2000. "Equilibrium in Sealed High Bid Auctions," Review of Economic Studies, Wiley Blackwell, vol. 67(3), pages 439-54, July.
- Athey, S., 1997.
"Sigle Crossing Properties and the Existence of Pure Strategy Equilibria in Games of Incomplete Information,"
97-11, Massachusetts Institute of Technology (MIT), Department of Economics.
- Athey, Susan, 2001. "Single Crossing Properties and the Existence of Pure Strategy Equilibria in Games of Incomplete Information," Econometrica, Econometric Society, vol. 69(4), pages 861-89, July.
- Moreira, Humberto Ataíde & Araújo, Aloísio Pessoa de & Castro Filho, Luciano I. de Castro Filho, 2004.
"Pure strategy equilibria of multidimensional and Non-monotonic auctions,"
Economics Working Papers (Ensaios Economicos da EPGE)
571, FGV/EPGE Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil).
- Aloisio Araujo & Luciano I. de Castro Filho, 2004. "Pure Strategy Equilibria of Multidimensional and Non-Monotonic Auctions," Econometric Society 2004 Latin American Meetings 300, Econometric Society.
- Fudenberg, Drew & Mobius, Markus & Szeidl, Adam, 2007.
"Existence of Equilibrium in Large Double Auctions,"
3043420, Harvard University Department of Economics.
- Fudenberg, Drew & Mobius, Markus & Szeidl, Adam, 2010. "Existence of Equilibrium in Large Double Auctions," Staff General Research Papers 32111, Iowa State University, Department of Economics.
- Drew Fudenberg & Markus M. Mobius & Adam Szeidl, 2004. "Existence of Equilibrium in Large Double Auctions," Harvard Institute of Economic Research Working Papers 2033, Harvard - Institute of Economic Research.
- Simon, Leo K & Zame, William R, 1990.
"Discontinuous Games and Endogenous Sharing Rules,"
Econometric Society, vol. 58(4), pages 861-72, July.
- Leo K. Simon and William R. Zame., 1987. "Discontinuous Games and Endogenous Sharing Rules," Economics Working Papers 8756, University of California at Berkeley.
- Simon, Leo K. & Zame, William R., 1987. "Discontinous Games and Endogenous Sharing Rules," Department of Economics, Working Paper Series qt8n46v2wv, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
- Lizzeri, Alessandro & Persico, Nicola, 2000. "Uniqueness and Existence of Equilibrium in Auctions with a Reserve Price," Games and Economic Behavior, Elsevier, vol. 30(1), pages 83-114, January.
- Akerlof, George A, 1970. "The Market for 'Lemons': Quality Uncertainty and the Market Mechanism," The Quarterly Journal of Economics, MIT Press, vol. 84(3), pages 488-500, August.
- Vives, Xavier, 1990.
"Nash equilibrium with strategic complementarities,"
Journal of Mathematical Economics,
Elsevier, vol. 19(3), pages 305-321.
- David McAdams, 2003. "Isotone Equilibrium in Games of Incomplete Information," Econometrica, Econometric Society, vol. 71(4), pages 1191-1214, 07.
- Williams, Steven R, 1991. "Existence and Convergence of Equilibria in the Buyer's Bid Double Auction," Review of Economic Studies, Wiley Blackwell, vol. 58(2), pages 351-74, April.
- Philip J Reny & Motty Perry, 2006. "Toward a Strategic Foundation for Rational Expectations Equilibrium," Econometrica, Econometric Society, vol. 74(5), pages 1231-1269, 09.
- Matthew O. Jackson & Leo K. Simon & Jeroen M. Swinkels & William R. Zame, 2002. "Communication and Equilibrium in Discontinuous Games of Incomplete Information," Econometrica, Econometric Society, vol. 70(5), pages 1711-1740, September.
- Milgrom, P. & Shannon, C., 1991.
"Monotone Comparative Statics,"
11, Stanford - Institute for Thoretical Economics.
- Milgrom, Paul R, 1981. "Rational Expectations, Information Acquisition, and Competitive Bidding," Econometrica, Econometric Society, vol. 49(4), pages 921-43, June.
- Matthew O. Jackson & Jeroen M. Swinkels, 2005.
"Existence of Equilibrium in Single and Double Private Value Auctions,"
Econometric Society, vol. 73(1), pages 93-139, 01.
- Jackson, Matthew O. & Jeroen Swinkels, 2004. "Existence of Equilibrium in Single and Double Private Value Auctions," Working Papers 1192, California Institute of Technology, Division of the Humanities and Social Sciences.
- Amann, Erwin & Leininger, Wolfgang, 1996. "Asymmetric All-Pay Auctions with Incomplete Information: The Two-Player Case," Games and Economic Behavior, Elsevier, vol. 14(1), pages 1-18, May.
- Philip J. Reny & Shmuel Zamir, 2004.
"On the Existence of Pure Strategy Monotone Equilibria in Asymmetric First-Price Auctions,"
Econometric Society, vol. 72(4), pages 1105-1125, 07.
- Philip J. Reny & Shmuel Zamir, 2002. "On the Existence of Pure Strategy Monotone Equilibria in Asymmetric First-Price Auctions," Discussion Paper Series dp292, The Center for the Study of Rationality, Hebrew University, Jerusalem.
- Luciano I. De Castro & Alvaro Riascos, 2007. "Characterization of Bidding Behavior in Multi-Unit," DOCUMENTOS CEDE 004382, UNIVERSIDAD DE LOS ANDES-CEDE.
- Luciano De Castro, 2012. "Correlation of Types in Bayesian Games," Discussion Papers 1556, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Aloisio Araujo & Luciano I. de Castro & Humberto Moreira, 2006.
"Non-Monotoniticies And The All-Pay Auction Tie-Breaking Rule,"
Economics Working Papers
we065924, Universidad Carlos III, Departamento de Economía.
- Aloisio Araujo & Luciano Castro & Humberto Moreira, 2008. "Non-monotoniticies and the all-pay auction tie-breaking rule," Economic Theory, Springer, vol. 35(3), pages 407-440, June.
- Luciano I. de Castro, 2008. "Equilibria Existence in Regular Discontinuous Games," Discussion Papers 1463, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- de Castro, Luciano I. & Riascos, Alvaro, 2009. "Characterization of bidding behavior in multi-unit auctions," Journal of Mathematical Economics, Elsevier, vol. 45(9-10), pages 559-575, September.
- Luciano Castro, 2011. "Equilibrium existence and approximation of regular discontinuous games," Economic Theory, Springer, vol. 48(1), pages 67-85, September.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.