Advanced Search
MyIDEAS: Login

A Robustly Efficient Auction

Contents:

Author Info

  • Kyungmin Kim
  • Antonio Penta

Abstract

We study the problem of efficient auction design in environments with interdependent values, under arbitrary common knowledge assumptions. We propose a simple mechanism and show that, under a rather mild condition, it "robustly" achieves efficiency. Our mechanism consists in a standard Vickrey auction, preceded by one round of communication, where agents report their private signals and receive transfers from the designer. We interpret the transfers as the cost for the designer to robustly achieve efficiency. We introduce a notion of robust informational size and show that the transfers are small if agents are informationally small in our sense. Furthermore, the transfers are decreasing in the amount of information available to the designer and in the strength of the common knowledge assumptions. In other words, the more robust the efficient implementation result, the higher the cost of achieving efficiency. We thus formalize the intuitive idea of a trade-off between robustness and efficient implementation and analyze the determinants of the "cost of robustness".

Download Info

If 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.
File URL: http://www.carloalberto.org/assets/working-papers/no.248.pdf
Download Restriction: no

Bibliographic Info

Paper provided by Collegio Carlo Alberto in its series Carlo Alberto Notebooks with number 248.

as in new window
Length: 37 pages
Date of creation: 2012
Date of revision:
Handle: RePEc:cca:wpaper:248

Contact details of provider:
Postal: Via Real Collegio, 30, 10024 Moncalieri (To)
Phone: +390116705000
Fax: +390116476847
Email:
Web page: http://www.carloalberto.org/
More information through EDIRC

Related research

Keywords: Cost of robustness; efficient auctions; informational size; interdependent values; robust mechanism design;

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Bergemann, Dirk & Morris, Stephen, 2011. "Robust implementation in general mechanisms," Games and Economic Behavior, Elsevier, vol. 71(2), pages 261-281, March.
  2. Stephen Morris & Dirk Bergemann, 2004. "Robust Mechanism Design," Yale School of Management Working Papers ysm380, Yale School of Management.
  3. repec:wop:humbsf:2000-72 is not listed on IDEAS
  4. Neeman, Zvika, 2004. "The relevance of private information in mechanism design," Journal of Economic Theory, Elsevier, vol. 117(1), pages 55-77, July.
  5. Jonathan Weinstein & Muhamet Yildiz, 2007. "A Structure Theorem for Rationalizability with Application to Robust Predictions of Refinements," Econometrica, Econometric Society, vol. 75(2), pages 365-400, 03.
  6. Dirk Bergemann & Stephen Morris, 2009. "Robust Implementation in Direct Mechanisms," Review of Economic Studies, Oxford University Press, vol. 76(4), pages 1175-1204.
  7. Georgy Artemov & Takashi Kunimoto & Roberto Serrano, 2007. "Robust Virtual Implementation with Incomplete Information: Toward a Reinterpretation of the Wilson Doctrine," Working Papers 2007-6, Brown University, Department of Economics.
  8. McAfee, R Preston & McMillan, John & Reny, Philip J, 1989. "Extracting the Surplus in the Common-Value Auction," Econometrica, Econometric Society, vol. 57(6), pages 1451-59, November.
  9. Milgrom,Paul, 2004. "Putting Auction Theory to Work," Cambridge Books, Cambridge University Press, number 9780521551847, October.
  10. Bergemann, Dirk & Morris, Stephen, 2009. "Robust virtual implementation," Theoretical Economics, Econometric Society, vol. 4(1), March.
  11. Philippe Aghion & Drew Fudenberg & Richard Holden & Takashi Kunimoto & Olivier Tercieux, 2012. "Subgame-Perfect Implementation Under Information Perturbations," The Quarterly Journal of Economics, Oxford University Press, vol. 127(4), pages 1843-1881.
  12. Antonio Penta, 2012. "Higher Order Uncertainty and Information: Static and Dynamic Games," Econometrica, Econometric Society, vol. 80(2), pages 631-660, 03.
Full references (including those not matched with items on IDEAS)

Citations

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:cca:wpaper:248. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Giovanni Bert).

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.