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Manipulative auction design

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  • Jehiel, Philippe

    ()
    (Department of Economics, Paris School of Economics and Department of Economics, University College London)

Abstract

This paper considers an auction design framework in which bidders get partial feedback about the distribution of bids submitted in earlier auctions: either bidders are asymmetric but past bids are disclosed in an anonymous way or several auction formats are being used and the distribution of bids but not the associated formats are disclosed. I employ the analogy-based expectation equilibrium (Jehiel, 2005) to model such situations. First-price auction in which past bids are disclosed in an anonymous way generates more revenues than the second-price auction while achieving an efficient outcome in the asymmetric private values two-bidder case with independent distributions. Besides, by using several auction formats with coarse feedback a designer can always extract more revenues than in Myerson's optimal auction, and yet less revenues than in the full information case whenever bidders enjoy ex-post quitting rights and the assignment and payment rules are monotonic in bids. These results suggest an important role of feedback disclosure as a novel instrument in mechanism design.

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Bibliographic Info

Article provided by Econometric Society in its journal Theoretical Economics.

Volume (Year): 6 (2011)
Issue (Month): 2 (May)
Pages:

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Handle: RePEc:the:publsh:687

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Related research

Keywords: Auction design; feedback equilibrium; manipulation;

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References

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  1. Philippe Jeniel, 2001. "Analogy-Based Expectation Equilibrium," Economics Working Papers 0003, Institute for Advanced Study, School of Social Science.
  2. Harsanyi, John C., 1994. "Games with Incomplete Information," Nobel Prize in Economics documents 1994-1, Nobel Prize Committee.
  3. John G. Riley & William Samuelson, 1979. "Optimal Auctions," UCLA Economics Working Papers 152, UCLA Department of Economics.
  4. Susan Athey & Philip A. Haile, 2006. "Empirical Models of Auctions," Levine's Bibliography 122247000000001045, UCLA Department of Economics.
  5. Jackson, Matthew O. & Kalai, Ehud, 1997. "Social Learning in Recurring Games," Games and Economic Behavior, Elsevier, vol. 21(1-2), pages 102-134, October.
  6. David Ettinger & Philippe Jehiel, 2006. "Towards a Theory of Deception," Levine's Bibliography 122247000000000775, UCLA Department of Economics.
  7. repec:wop:humbsf:2000-72 is not listed on IDEAS
  8. Ignacio Esponda, 2008. "Information feedback in first price auctions," RAND Journal of Economics, RAND Corporation, vol. 39(2), pages 491-508.
  9. Philippe Jehiel & Frederic Koessler, 2005. "Revisiting Games of Incomplete Information with Analogy-Based Expectations," THEMA Working Papers 2005-04, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
  10. Fudenberg, Drew & Levine, David, 1998. "Learning in games," European Economic Review, Elsevier, vol. 42(3-5), pages 631-639, May.
  11. Philippe Jehiel & Steffen Huck & Tom Rutter, 2007. "Learning Spillover and Analogy-based Expectations: a Multi-Game Experiment," Levine's Bibliography 843644000000000120, UCLA Department of Economics.
  12. Maskin, Eric & Riley, John, 2000. "Asymmetric Auctions," Review of Economic Studies, Wiley Blackwell, vol. 67(3), pages 413-38, July.
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Citations

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Cited by:
  1. Grimm, Veronika & Mengel, Friederike, 2012. "An experiment on learning in a multiple games environment," Journal of Economic Theory, Elsevier, vol. 147(6), pages 2220-2259.
  2. François Maréchal & Pierre-Henri Morand, 2012. "The public release of information in first-price sealed-bid auctions," Review of Economic Design, Springer, vol. 16(4), pages 323-330, December.
  3. Gábor Virág, 2013. "First-price auctions with resale: the case of many bidders," Economic Theory, Springer, vol. 52(1), pages 129-163, January.
  4. Philippe Jehiel & Laurent Lamy, 2011. "Absolute auctions and secret reserve prices: Why are they used?," Levine's Working Paper Archive 786969000000000316, David K. Levine.

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