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Auctions with Options to Re-auction

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Author Info
Grant, Simon (Rice U and Australian National U)
Kajii, Atsushi (Osaka U)
Menezes, Flavio (Australian National U)
Ryan, Matthew (U of Auckland)

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Abstract

We examine a dynamic model of English auctions with independent private values. There is a single object for sale and it is not possible for the seller, who has a value of zero for the object, to commit not to sell in the future if a sale is not accomplished today. The seller may be able to commit to a reserve price, or make a cheap-talk announcement of a reserve price and secretly bid for the object herself in order to re-auction it in a later round with a new set of bidders. Bidders are "short-lived" in the sense that at the end of each round all existing bidders vanish and new bidders start arriving. This framework allows us to obtain existing results for one shot-auctions as special cases. This framework also allows us to capture some of the features of thick internet auctions and to obtain some new insights on the role of commitment, on optimal length and on socially optimal reserve prices that are not apparent from a one-shot auction perspective.

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Paper provided by Rice University, Department of Economics in its series Working Papers with number 2003-15.

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Date of creation: Jul 2003
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Handle: RePEc:ecl:riceco:2003-15

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D44 - Microeconomics - - Market Structure and Pricing - - - Auctions

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.:

  1. McAfee, R. Preston & Vincent, Daniel, 1997. "Sequentially Optimal Auctions," Games and Economic Behavior, Elsevier, vol. 18(2), pages 246-276, February. [Downloadable!] (restricted)
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  2. Burguet, Roberto & Sakovics, Jozsef, 1996. "Reserve Prices without Commitment," Games and Economic Behavior, Elsevier, vol. 15(2), pages 149-164, August. [Downloadable!] (restricted)
  3. Riley, John G & Samuelson, William F, 1981. "Optimal Auctions," American Economic Review, American Economic Association, vol. 71(3), pages 381-92, June. [Downloadable!] (restricted)
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  4. McAfee, R. Preston & McMillan, John, 1987. "Auctions with a stochastic number of bidders," Journal of Economic Theory, Elsevier, vol. 43(1), pages 1-19, October. [Downloadable!] (restricted)
  5. Horstmann, Ignatius J & LaCasse, Chantale, 1997. "Secret Reserve Prices in a Bidding Model with a Resale Option," American Economic Review, American Economic Association, vol. 87(4), pages 663-84, September. [Downloadable!] (restricted)
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  6. Haile, Philip A., 2003. "Auctions with private uncertainty and resale opportunities," Journal of Economic Theory, Elsevier, vol. 108(1), pages 72-110, January. [Downloadable!] (restricted)
  7. Levin, Dan & Smith, James L, 1994. "Equilibrium in Auctions with Entry," American Economic Review, American Economic Association, vol. 84(3), pages 585-99, June. [Downloadable!] (restricted)
  8. Holt, Charles A, Jr, 1979. "Uncertainty and the Bidding for Incentive Contracts," American Economic Review, American Economic Association, vol. 69(4), pages 697-705, September. [Downloadable!] (restricted)
  9. Alvin E. Roth & Axel Ockenfels, 2000. "Last Minute Bidding and the Rules for Ending Second-Price Auctions: Theory and Evidence from a Natural Experiment on the Internet," NBER Working Papers 7729, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  10. Lucking-Reiley, David, 2000. "Auctions on the Internet: What's Being Auctioned, and How?," Journal of Industrial Economics, Blackwell Publishing, vol. 48(3), pages 227-52, September. [Downloadable!] (restricted)
  11. Harstad, Ronald M. & Kagel, John H. & Levin, Dan, 1990. "Equilibrium bid functions for auctions with an uncertain number of bidders," Economics Letters, Elsevier, vol. 33(1), pages 35-40, May. [Downloadable!] (restricted)
  12. Engelbrecht-Wiggans Richard, 1993. "Optimal Auctions Revisited," Games and Economic Behavior, Elsevier, vol. 5(2), pages 227-239, April. [Downloadable!] (restricted)
  13. Dale Mortensen, 1984. "Job Search and Labor Market Analysis," Discussion Papers 594, Northwestern University, Center for Mathematical Studies in Economics and Management Science. [Downloadable!]
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  14. Diamond, Peter A., 1971. "A model of price adjustment," Journal of Economic Theory, Elsevier, vol. 3(2), pages 156-168, June. [Downloadable!] (restricted)
  15. Chris Jones & Flavio Menezes & Francis Vella, 2004. "Auction Price Anomalies: Evidence from Wool Auctions in Australia," The Economic Record, The Economic Society of Australia, vol. 80(250), pages 271-288, 09. [Downloadable!] (restricted)
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  16. Porter, Robert H, 1995. "The Role of Information in U.S. Offshore Oil and Gas Lease Auctions," Econometrica, Econometric Society, vol. 63(1), pages 1-27, January. [Downloadable!] (restricted)
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  17. Graham, Daniel A. & Marshall, Robert C. & Richard, Jean-Francois, 1990. "Phantom bidding against heterogeneous bidders," Economics Letters, Elsevier, vol. 32(1), pages 13-17, January. [Downloadable!] (restricted)
  18. Milgrom, Paul R & Weber, Robert J, 1982. "A Theory of Auctions and Competitive Bidding," Econometrica, Econometric Society, vol. 50(5), pages 1089-1122, September. [Downloadable!] (restricted)
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(explanations, 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.)

  1. Glowicka, Ela & Beck, Jonathan, 2006. "A note on reserve price commitments in the Vickrey auction," MPRA Paper 6669, University Library of Munich, Germany. [Downloadable!]
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