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Manipulative auction design

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Author Info

  • 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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Web page: http://econtheory.org

Related research

Keywords: Auction design; feedback equilibrium; manipulation;

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References

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  1. John G. Riley & William Samuelson, 1979. "Optimal Auctions," UCLA Economics Working Papers 152, UCLA Department of Economics.
  2. Susan Athey & Philip A. Haile, 2006. "Empirical Models of Auctions," Levine's Bibliography 122247000000001045, UCLA Department of Economics.
  3. Jackson, Matthew O. & Kalai, Ehud, 1997. "Social Learning in Recurring Games," Games and Economic Behavior, Elsevier, vol. 21(1-2), pages 102-134, October.
  4. Philippe Jehiel, 2005. "Analogy-Based Expectation Equilibrium," Levine's Bibliography 784828000000000106, UCLA Department of Economics.
  5. Drew Fudenberg & David K. Levine, 1998. "Learning in Games," Levine's Working Paper Archive 2222, David K. Levine.
  6. Philippe Jehiel & Frédéric Koessler, 2006. "Revisiting Games of Incomplete Information with Analogy-Based Expectations," Levine's Bibliography 122247000000000252, UCLA Department of Economics.
  7. Philippe Jehiel & David Ettinger, 2005. "Towards a theory of deception," PSE Working Papers halshs-00590767, HAL.
  8. Harsanyi, John C., 1994. "Games with Incomplete Information," Nobel Prize in Economics documents 1994-1, Nobel Prize Committee.
  9. repec:wop:humbsf:2000-72 is not listed on IDEAS
  10. Ignacio Esponda, 2008. "Information feedback in first price auctions," RAND Journal of Economics, RAND Corporation, vol. 39(2), pages 491-508.
  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. Gábor Virág, 2013. "First-price auctions with resale: the case of many bidders," Economic Theory, Springer, vol. 52(1), pages 129-163, January.
  2. Philippe Jehiel & Laurent Lamy, 2011. "Absolute auctions and secret reserve prices: Why are they used?," Levine's Working Paper Archive 786969000000000316, David K. Levine.
  3. 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.
  4. Grimm, Veronika & Mengel, Friederike, 2009. "An Experiment on Learning in a Multiple Games Environment," Research Memorandum 007, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).

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