Defensive sniping and efficiency in simultaneous hard-close proxy auctions
AbstractA well-known myopic bidding strategy fails to support an equilibrium of simultaneous ascending proxy auctions for heterogeneous items when a hard-close rule is in place. This is because, in common with the single-auction case, last minute bidding (sniping) is a best response to naive behaviour. However, a modification to the myopic strategy in which all bidders submit an additional bid in the closing stages of the auction–a practice I call ‘defensive sniping’–is shown to yield an efficient, belief-free equilibrium of such environments. This equilibrium is essentially unique within the class of belief-free, efficient equilibria.
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Bibliographic InfoArticle provided by Elsevier in its journal Journal of Mathematical Economics.
Volume (Year): 48 (2012)
Issue (Month): 1 ()
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Web page: http://www.elsevier.com/locate/jmateco
Hard-close; Simultaneous proxy auctions; Efficiency; Myopic bidding; Belief-free;
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