IDEAS home Printed from https://ideas.repec.org/p/nwu/cmsems/893.html
   My bibliography  Save this paper

Modeling Competitive Behavior

Author

Listed:
  • Daniel R. Vincent

Abstract

A single seller of an indivisible object wishes to sell the good to one of many buyers. The seller has zero value for the good; the buyers have a commonly known identical value of one. This paper attempts to determine strategic environments, which ensure the seller's ability to exploit the competitive behavior of the buyers to extract all the surplus in the game. It is shown that in many simple dynamic games, there are subgame perfect equilibria, which involve the seller giving up the good for free. Even if the seller has an informational advantage which allows him to keep bidders from learning the bidding behavior of their opponents, there still exist (perfect Bayesian) equilibria which involve a sale at the price of zero. However, in this case, a simple refinement in the spirit of sequential equilbria can be used to rule out such collusive behavior in the spirit of sequential equilibria can be used to rule out such collusive behavior and to show that the unique equlibrium outcome satisfying this refinement involve a price of one.

Suggested Citation

  • Daniel R. Vincent, 1990. "Modeling Competitive Behavior," Discussion Papers 893, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    • Handle: RePEc:nwu:cmsems:893
    as

    Download full text from publisher

    File URL: http://www.kellogg.northwestern.edu/research/math/papers/893.pdf
    File Function: main text
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Rubinstein, Ariel, 1982. "Perfect Equilibrium in a Bargaining Model," Econometrica, Econometric Society, vol. 50(1), pages 97-109, January.
    2. Kreps, David M & Wilson, Robert, 1982. "Sequential Equilibria," Econometrica, Econometric Society, vol. 50(4), pages 863-894, July.
    3. Aumann, Robert J, 1987. "Correlated Equilibrium as an Expression of Bayesian Rationality," Econometrica, Econometric Society, vol. 55(1), pages 1-18, January.
    4. Xavier Freixas & Roger Guesnerie & Jean Tirole, 1985. "Planning under Incomplete Information and the Ratchet Effect," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 52(2), pages 173-191.
    5. Drew Fudenberg & Eric Maskin, 2008. "The Folk Theorem In Repeated Games With Discounting Or With Incomplete Information," World Scientific Book Chapters, in: Drew Fudenberg & David K Levine (ed.), A Long-Run Collaboration On Long-Run Games, chapter 11, pages 209-230, World Scientific Publishing Co. Pte. Ltd..
    6. Lawrence Ausubel & Raymond Deneckere, 1985. "One is Almost Enough for Monopoly," Discussion Papers 669, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    7. Milgrom, Paul R & Weber, Robert J, 1982. "A Theory of Auctions and Competitive Bidding," Econometrica, Econometric Society, vol. 50(5), pages 1089-1122, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Yunjian Xu & Katrina Ligett, 2018. "Commitment in first-price auctions," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 66(2), pages 449-489, August.
    2. Thomas, Charles J., 2018. "An alternating-offers model of multilateral negotiations," Journal of Economic Behavior & Organization, Elsevier, vol. 149(C), pages 269-293.
    3. Hendrikse, George W.J., 2006. "On the Coexistence of Spot and Contract Markets: a Delivery Requirement Explanation," 2006 Annual meeting, July 23-26, Long Beach, CA 21041, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    4. Wooders, John, 1998. "Walrasian equilibrium in matching models," Mathematical Social Sciences, Elsevier, vol. 35(3), pages 245-259, May.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Etro, Federico, 2017. "Research in economics and game theory. A 70th anniversary," Research in Economics, Elsevier, vol. 71(1), pages 1-7.
    2. Kjell Hausken, 1997. "Game-theoretic and Behavioral Negotiation Theory," Group Decision and Negotiation, Springer, vol. 6(6), pages 511-528, December.
    3. Alejandro Caparrós, 2016. "Bargaining and International Environmental Agreements," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 65(1), pages 5-31, September.
    4. Dionne, G. & Doherty, N., 1991. "Adverse Selection In Insurance Markets: A Selective Survey," Cahiers de recherche 9105, Centre interuniversitaire de recherche en économie quantitative, CIREQ.
    5. Seok-ju Cho & John Duggan, 2015. "A folk theorem for the one-dimensional spatial bargaining model," International Journal of Game Theory, Springer;Game Theory Society, vol. 44(4), pages 933-948, November.
    6. Jinpeng Ma, 1997. "English Auctions and Walrasian Equilibria with Multiple Objects: a dynamic approach," Departmental Working Papers 199702, Rutgers University, Department of Economics.
    7. Radzvilas, Mantas, 2016. "Hypothetical Bargaining and the Equilibrium Selection Problem in Non-Cooperative Games," MPRA Paper 70248, University Library of Munich, Germany.
    8. Pedro Bó, 2007. "Social norms, cooperation and inequality," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 30(1), pages 89-105, January.
    9. Schaefer, Alexander, 2021. "Rationality, uncertainty, and unanimity: an epistemic critique of contractarianism," Economics and Philosophy, Cambridge University Press, vol. 37(1), pages 82-117, March.
    10. Bergin, James, 1989. "A characterization of sequential equilibrium strategies in infinitely repeated incomplete information games," Journal of Economic Theory, Elsevier, vol. 47(1), pages 51-65, February.
    11. Walter Beckert, 2004. "Dynamic Monopolies with Stochastic Demand," Birkbeck Working Papers in Economics and Finance 0404, Birkbeck, Department of Economics, Mathematics & Statistics.
    12. van Damme, E.E.C., 1995. "Game theory : The next stage," Other publications TiSEM 7779b0f9-bef5-45c7-ae6b-7, Tilburg University, School of Economics and Management.
    13. Quan Wen, 2002. "Repeated Games with Asynchronous Moves," Vanderbilt University Department of Economics Working Papers 0204, Vanderbilt University Department of Economics.
    14. Houba, H., 1992. "Non-cooperative bargaining in infinitely repeated games with binding contracts," Serie Research Memoranda 0009, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics.
    15. Jehiel, Philippe, 2005. "Analogy-based expectation equilibrium," Journal of Economic Theory, Elsevier, vol. 123(2), pages 81-104, August.
    16. Benford, Frank A., 1998. "On the Dynamics of the Regulation of Pollution: Incentive Compatible Regulation of a Persistent Pollutant," Journal of Environmental Economics and Management, Elsevier, vol. 36(1), pages 1-25, July.
    17. Thijssen, J.J.J., 2003. "Investment under uncertainty, market evolution and coalition spillovers in a game theoretic perspective," Other publications TiSEM 672073a6-492e-4621-8d4a-0, Tilburg University, School of Economics and Management.
    18. Shmuel Zamir, 2008. "Bayesian games: Games with incomplete information," Discussion Paper Series dp486, The Federmann Center for the Study of Rationality, the Hebrew University, Jerusalem.
    19. Xie, Huan & Lee, Yong-Ju, 2012. "Social norms and trust among strangers," Games and Economic Behavior, Elsevier, vol. 76(2), pages 548-555.
    20. David Nickerson & Asha Sadanand & Venkatraman Sadanand, 1994. "Strategic delay and endogenous offers in bargaining games with private information," Journal of Economics, Springer, vol. 60(2), pages 125-154, June.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nwu:cmsems:893. See general information about how to correct material in RePEc.

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Fran Walker (email available below). General contact details of provider: https://edirc.repec.org/data/cmnwuus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.