An Ascending Auction for Independent Values: Uniqueness and Robustness to Strategic Uncertainty
AbstractWe consider an single object auction environment with interdependent valuations and a generalized Vickrey-Clark-Groves allocation mechanism that allocates the object almost efficiently in a strict ex post equilibrium. If there is a significant amount of interdependence, there are multiple rationalizable outcomes of this direct mechanism and any other mechanism that allocates the object almost efficiently. This is true whether the agents know about each others' payoff types or not. We consider an ascending price dynamic version of the generalized VCG mechanism. When there is complete information among the agents of their payoff types, we show that the almost efficient allocation is the unique backward induction (i.e., extensive form rationalizable) outcome of the auction, even when there are multiple rationalizable outcomes in the static version. This example illustrates the role that open auctions may play in obtaining efficient allocations by reducing strategic uncertainty.
Download InfoIf 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.
Bibliographic InfoPaper provided by Cowles Foundation for Research in Economics, Yale University in its series Cowles Foundation Discussion Papers with number 1600.
Length: 14 pages
Date of creation: Jan 2007
Date of revision: Mar 2007
Publication status: Published in American Economic Review Papers and Proceedings (May 2007), 97(2): 125-130
Note: CFP 1207.
Contact details of provider:
Postal: Yale University, Box 208281, New Haven, CT 06520-8281 USA
Phone: (203) 432-3702
Fax: (203) 432-6167
Web page: http://cowles.econ.yale.edu/
More information through EDIRC
Postal: Cowles Foundation, Yale University, Box 208281, New Haven, CT 06520-8281 USA
Find related papers by JEL classification:
- C79 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Other
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
This paper has been announced in the following NEP Reports:
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.:
- Dirk Bergemann & Stephen Morris, 2006.
"Robust Implementation: The Case of Direct Mechanisms","
Cowles Foundation Discussion Papers
1561R, Cowles Foundation for Research in Economics, Yale University, revised May 2007.
- Dirk Bergemann & Stephen Morris, 2006. "Robust Implementation: The Case of Direct Mechanisms," Levine's Bibliography 122247000000001194, UCLA Department of Economics.
- Dirk Bergemann & Stephen Morris, 2006. "Robust Implementation: The Case of Direct Mechanisms," Cowles Foundation Discussion Papers 1561, Cowles Foundation for Research in Economics, Yale University.
- Abreu, Dilip & Sen, Arunava, 1990. "Subgame perfect implementation: A necessary and almost sufficient condition," Journal of Economic Theory, Elsevier, vol. 50(2), pages 285-299, April.
- Gale, D., 1992.
"Dynamic Coordiantion Games,"
Papers, Boston University - Department of Economics
13, Boston University - Department of Economics.
- Milgrom, Paul R & Weber, Robert J, 1982.
"A Theory of Auctions and Competitive Bidding,"
Econometrica, Econometric Society,
Econometric Society, vol. 50(5), pages 1089-1122, September.
- Paul Milgrom & Robert J. Weber, 1981. "A Theory of Auctions and Competitive Bidding," Discussion Papers, Northwestern University, Center for Mathematical Studies in Economics and Management Science 447R, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Brandenburger, Adam & Dekel, Eddie, 1987. "Rationalizability and Correlated Equilibria," Econometrica, Econometric Society, Econometric Society, vol. 55(6), pages 1391-1402, November.
- Pearce, David G, 1984. "Rationalizable Strategic Behavior and the Problem of Perfection," Econometrica, Econometric Society, Econometric Society, vol. 52(4), pages 1029-50, July.
- Partha Dasgupta & Eric Maskin, 2000.
The Quarterly Journal of Economics, MIT Press,
MIT Press, vol. 115(2), pages 341-388, May.
- P. Dasgupta & Eric Maskin, 1998. "Efficient Auctions," Harvard Institute of Economic Research Working Papers 1857, Harvard - Institute of Economic Research.
- Guillermo Caruana & Liran Einav, 2008. "A Theory of Endogenous Commitment," Review of Economic Studies, Oxford University Press, vol. 75(1), pages 99-116.
- Moore, John & Repullo, Rafael, 1988. "Subgame Perfect Implementation," Econometrica, Econometric Society, Econometric Society, vol. 56(5), pages 1191-1220, September.
- repec:wop:humbsf:2000-72 is not listed on IDEAS
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Glena Ames).
If references are entirely missing, you can add them using this form.