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Coasian dynamics in repeated English auctions

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  • Flávio Menezes
  • Matthew Ryan

Abstract

We extend the Coase conjecture to the case of a seller with a single object, who faces n potential buyers and holds a sequence of English auctions until the object is sold. In an independent-private-values environment in which buyers and sellers share the same discount factor, we show that the (perfect Bayesian) equilibrium path of reserve prices obeys a Coasian logic. Moreover, the equilibrium reserve path lies below that for the model of repeated sealed-bid, second-price auctions studied by McAfee and Vincent (1997). Nevertheless, the open (English) and sealed-bid formats are shown to be revenue equivalent.
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Suggested Citation

  • Flávio Menezes & Matthew Ryan, 2009. "Coasian dynamics in repeated English auctions," International Journal of Game Theory, Springer;Game Theory Society, vol. 38(3), pages 349-366, November.
    • Handle: RePEc:spr:jogath:v:38:y:2009:i:3:p:349-366
    DOI: 10.1007/s00182-009-0164-7
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    References listed on IDEAS

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    1. John G. Riley & Richard Zeckhauser, 1980. "Optimal Selling Strategies:," UCLA Economics Working Papers 180, UCLA Department of Economics.
    2. Jean Tirole, 1988. "The Theory of Industrial Organization," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200716, December.
    3. Simon Grant & Atsushi Kajii & Flavio Menezes & Matthew J. Ryan, 2006. "Auctions with options to re‐auction," International Journal of Economic Theory, The International Society for Economic Theory, vol. 2(1), pages 17-39, March.
    4. Roger B. Myerson, 1981. "Optimal Auction Design," Mathematics of Operations Research, INFORMS, vol. 6(1), pages 58-73, February.
    5. John Riley & Richard Zeckhauser, 1983. "Optimal Selling Strategies: When to Haggle, When to Hold Firm," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 98(2), pages 267-289.
    6. McAfee, R. Preston & Vincent, Daniel, 1997. "Sequentially Optimal Auctions," Games and Economic Behavior, Elsevier, vol. 18(2), pages 246-276, February.
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    9. Drew Fudenberg & David K. Levine & Jean Tirole, 1985. "Infinite-Horizon Models of Bargaining with One-Sided Incomplete Information," Levine's Working Paper Archive 1098, David K. Levine.
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    Cited by:

    1. Patrick Hummel, 2018. "Reserve prices in repeated auctions," International Journal of Game Theory, Springer;Game Theory Society, vol. 47(1), pages 273-299, March.

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    More about this item

    Keywords

    Dynamic auctions; Coase conjecture; Reserve prices; D44;
    All these keywords.

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions

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