Non-Committed Procurement under Intricate Uncertainty
AbstractThis paper studies asymmetric first-price menu auctions in the procurement environment where the buyer does not commit to a decision rule and asymmetric sellers have interdependent costs and statistically affiliated signals. Sellers compete in bidding a menu of contracts, where a contract specifies a vector of characteristics and a payment required from the buyer for delivering these characteristics. The buyer does not commit ex-ante to a decision rule but rather upon observing all the menus offered by sellers chooses the best contract. This paper establishes the existence of a continuum of separating monotone equilibria in this game bounded above by the jointly ex-post efficient outcome and below by the jointly interim efficient outcome. It shows that the jointly ex-post efficient equilibrium outcome is the only ex-post renegotiation proof outcome and it is also ex-ante robust to all continuation equilibria.
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Bibliographic InfoPaper provided by McMaster University in its series Department of Economics Working Papers with number 2010-03.
Length: 34 pages
Date of creation: Mar 2010
Date of revision: Mar 2013
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first-price menu auctions; procurement; interdependent values; monotone equilibria; joint ex-post efficiency; ex-post renegotiation-proofness; ex-ante robustness;
Find related papers by JEL classification:
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
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