An "Alternating Recognition" Model of English Auctions
AbstractWe present an alternative abstraction of an English (oral ascending) auction to the standard, in Milgrom and Weber (1982), that accords more closely with practices in some auction markets. In particular, the assumptions that exits are irrevocable and necessarily public are dropped, making endogenous the decision to compete silently and privately, or openly. In the model, the price rises in a stylization of an auctioneer alternately recognizing two bidders who affirm willingness to pay the current price. The auctioneer pays attention to other bidders only when a recognized bidder exits. Such exits may be temporary, although we construct an equilibrium in which there is no benefit to exit and reentry. The number of public exits is stochastic; frequently a losing "bidder" will remain silent, giving no indication of his willingness to pay, and hence yielding no useful inference about his private information. Thus, the source of the expected revenue advantage of English auctions over second-price auctions is only stochastically available. Moreover, when public exits are incomplete, the ordinal rank of the bidder whose private information can be inferred is unknown, making that information less valuable. Consequently, the simpler formula for expected revenue in second-price auctions may be the preferred approximation for English auctions.
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.
Bibliographic InfoArticle provided by INFORMS in its journal Management Science.
Volume (Year): 46 (2000)
Issue (Month): 1 (January)
Competitive Bidding; Oral Auctions; Auction Theory; Information Disclosure in Auctions;
Other versions of this item:
- Harstad, Ronald M. & Michael H. Rothkopf, 1995. "An "Alternating Recognition" Model of English Auctions," Discussion Paper Serie B 348, University of Bonn, Germany.
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Ronald M. Harstad, 2009.
"Does a Seller Really Want Another Bidder?,"
0909, Department of Economics, University of Missouri.
- Ronald M. Harstad, 2005.
"Rational Participation Revolutionizes Auction Theory,"
0518, Department of Economics, University of Missouri.
- Ronald M. Harstad, 2005. "Rational Participation Revolutionizes Auction Theory," Working Papers 0504, Department of Economics, University of Missouri.
- Yin, Pai-Ling, 2007. "Empirical tests of information aggregation," International Journal of Industrial Organization, Elsevier, vol. 25(6), pages 1179-1189, December.
- Olivier Compte & Philippe Jehiel, 2005.
"Auctions and Information acquisition: Sealed-bid or Dynamic Formats?,"
784828000000000495, UCLA Department of Economics.
- Olivier Compte & Philippe Jehiel, 2007. "Auctions and information acquisition: sealed bid or dynamic formats?," RAND Journal of Economics, RAND Corporation, vol. 38(2), pages 355-372, 06.
- Ronald M Harstad, 2011. "Endogenous Competition Alters the Structure of Optimal Auctions," ISER Discussion Paper 0816, Institute of Social and Economic Research, Osaka University.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mirko Janc).
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.