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Becoming the Neighbor Bidder: Endogenous Winner’s Curse in Dynamic Mechanisms

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  • Alejandro Francetich
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    Abstract

    This paper addresses the problem of sequentially allocating timesensitive goods, or one-period leases on a durable good, among agents who compete through time and learn about the common component of the value of the allocation through experience. I show that efficiency is unattainable, and I identify simple variations of sequential second-price or English auctions that implement the second best and the revenuemaximizing auction. When the units are divisible, I also identify the corresponding auctions that allow for double sourcing.Keywords: Dynamic mechanism design, sequential auctions, interdependent values, multi-dimensional types, winner’s curse, double sourcing JEL Classification Numbers: D82, D86

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    Paper provided by IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University in its series Working Papers with number 501.

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    Date of creation: 2013
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    Handle: RePEc:igi:igierp:501

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