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Dynamic Auctions

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  • Daniel R. Vincent

Abstract

A dynamic trading game is examined in which two uninformed buyers engage in Bertrand-like competition to attempt to purchase a single object of uncertain quality from an informed seller. It is shown that there exists a unique perfect sequential equilibrium. The game is compared to an analogous bargaining game in which a single uninformed buyer makes offers to a single seller. Despite the fact that in the equilibrium of the competitive game, buyers compete away their surplus, it is shown that sellers can often gain a higher ex ante surplus in the bargaining game.

Suggested Citation

  • Daniel R. Vincent, 1990. "Dynamic Auctions," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 57(1), pages 49-61.
    • Handle: RePEc:oup:restud:v:57:y:1990:i:1:p:49-61.
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    File URL: http://hdl.handle.net/10.2307/2297542
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    Cited by:

    1. Manuel Adelino & Kristopher Gerardi & Barney Hartman-Glaser, 2016. "Are Lemons Sold First? Dynamic Signaling in the Mortgage Market," FRB Atlanta Working Paper 2016-8, Federal Reserve Bank of Atlanta.
    2. Maarten C. W. Janssen & Vladimir A. Karamychev, 2002. "Cycles and multiple equilibria in the market for durable lemons," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 20(3), pages 579-601.
    3. Cramton, Peter & Schwartz, Alan, 1991. "Using Auction Theory to Inform Takeover Regulation," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 7(1), pages 27-53, Spring.
    4. Kim, Kyungmin, 2017. "Information about sellers' past behavior in the market for lemons," Journal of Economic Theory, Elsevier, vol. 169(C), pages 365-399.

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