IDEAS home Printed from https://ideas.repec.org/p/pen/papers/18-001.html
   My bibliography  Save this paper

A Very Robust Auction Mechanism

Author

Listed:
  • Richard McLean

    (Department of Economics, Rutgers University)

  • Andrew Postlewaite

    (Department of Economics, University of Pennsylvania)

Abstract

A single unit of a good is to be sold by auction to one of many potential buyers. There are two equally likely states of the world. Potential buyers receive noisy signals of the state of the world. The accuracies of buyers ’signals may di¤er. A buyer’s valuation is the sum of a common value component that depends on the state and an idiosyncratic private value component independent of the state. The seller knows nothing about the accuracies of the signals or about buyers’ beliefs about the accuracies. It is common knowledge among buyers that the accuracies of the signals are conditionally independent and uniformly bounded below 1 and above 1=2, and nothing more. We demonstrate a modifi…ed second price auction that has the property that, for any " > 0; the seller’s expected revenue will be within " of the highest buyer expected value when the number of buyers is sufficiently large and buyers make undominated bids.

Suggested Citation

  • Richard McLean & Andrew Postlewaite, 2018. "A Very Robust Auction Mechanism," PIER Working Paper Archive 18-001, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania, revised 16 Jan 2018.
    • Handle: RePEc:pen:papers:18-001
    as

    Download full text from publisher

    File URL: https://economics.sas.upenn.edu/sites/default/files/filevault/SSRN_18-001.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Dirk Bergemann & Benjamin Brooks & Stephen Morris, 2017. "First‐Price Auctions With General Information Structures: Implications for Bidding and Revenue," Econometrica, Econometric Society, vol. 85, pages 107-143, January.
    2. McLean, Richard P. & Postlewaite, Andrew, 2017. "A dynamic non-direct implementation mechanism for interdependent value problems," Games and Economic Behavior, Elsevier, vol. 101(C), pages 34-48.
    3. Songzi Du, 2018. "Robust Mechanisms Under Common Valuation," Econometrica, Econometric Society, vol. 86(5), pages 1569-1588, September.
    4. Gilboa, Itzhak & Schmeidler, David, 1989. "Maxmin expected utility with non-unique prior," Journal of Mathematical Economics, Elsevier, vol. 18(2), pages 141-153, April.
    5. Borgers, Tilman & Krahmer, Daniel & Strausz, Roland, 2015. "An Introduction to the Theory of Mechanism Design," OUP Catalogue, Oxford University Press, number 9780199734023, Decembrie.
    6. Wolitzky, Alexander, 2016. "Mechanism design with maxmin agents: theory and an application to bilateral trade," Theoretical Economics, Econometric Society, vol. 11(3), 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. Songzi Du, 2018. "Robust Mechanisms Under Common Valuation," Econometrica, Econometric Society, vol. 86(5), pages 1569-1588, September.
    2. Jin Xi & Haitian Xie, 2021. "Strength in Numbers: Robust Mechanisms for Public Goods with Many Agents," Papers 2101.02423, arXiv.org, revised May 2023.

    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. Tang, Rui & Zhang, Mu, 2021. "Maxmin implementation," Journal of Economic Theory, Elsevier, vol. 194(C).
    2. Song, Yangwei, 2022. "Approximate Bayesian Implementation and Exact Maxmin Implementation: An Equivalence," Rationality and Competition Discussion Paper Series 362, CRC TRR 190 Rationality and Competition.
    3. Laohakunakorn, Krittanai & Levy, Gilat & Razin, Ronny, 2019. "Private and common value auctions with ambiguity over correlation," LSE Research Online Documents on Economics 101410, London School of Economics and Political Science, LSE Library.
    4. Ju Hu & Xi Weng, 2021. "Robust persuasion of a privately informed receiver," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 72(3), pages 909-953, October.
    5. Alex Suzdaltsev, 2020. "Distributionally Robust Pricing in Independent Private Value Auctions," Papers 2008.01618, arXiv.org, revised Aug 2020.
    6. Song, Yangwei, 2023. "Approximate Bayesian implementation and exact maxmin implementation: An equivalence," Games and Economic Behavior, Elsevier, vol. 139(C), pages 56-87.
    7. Laohakunakorn, Krittanai & Levy, Gilat & Razin, Ronny, 2019. "Private and common value auctions with ambiguity over correlation," Journal of Economic Theory, Elsevier, vol. 184(C).
    8. Wanchang Zhang, 2021. "Random Double Auction: A Robust Bilateral Trading Mechanism," Papers 2105.05427, arXiv.org, revised May 2022.
    9. Suzdaltsev, Alex, 2022. "Distributionally robust pricing in independent private value auctions," Journal of Economic Theory, Elsevier, vol. 206(C).
    10. Sosung Baik & Sung-Ha Hwang, 2021. "Auction design with ambiguity: Optimality of the first-price and all-pay auctions," Papers 2110.08563, arXiv.org.
    11. Tommaso Denti & Doron Ravid, 2023. "Robust Predictions in Games with Rational Inattention," Papers 2306.09964, arXiv.org.
    12. Song, Yangwei, 2018. "Efficient Implementation with Interdependent Valuations and Maxmin Agents," Rationality and Competition Discussion Paper Series 92, CRC TRR 190 Rationality and Competition.
    13. Ethan Che, 2019. "Distributionally Robust Optimal Auction Design under Mean Constraints," Papers 1911.07103, arXiv.org, revised Feb 2022.
    14. Toomas Hinnosaar & Keiichi Kawai, 2020. "Robust pricing with refunds," RAND Journal of Economics, RAND Corporation, vol. 51(4), pages 1014-1036, December.
    15. Evren, Özgür, 2019. "Recursive non-expected utility: Connecting ambiguity attitudes to risk preferences and the level of ambiguity," Games and Economic Behavior, Elsevier, vol. 114(C), pages 285-307.
    16. Jin Xi & Haitian Xie, 2021. "Strength in Numbers: Robust Mechanisms for Public Goods with Many Agents," Papers 2101.02423, arXiv.org, revised May 2023.
    17. Mark Armstrong & Jidong Zhou, 2022. "Consumer Information and the Limits to Competition," American Economic Review, American Economic Association, vol. 112(2), pages 534-577, February.
    18. Sosung Baik & Sung-Ha Hwang, 2022. "Revenue Comparisons of Auctions with Ambiguity Averse Sellers," Papers 2211.12669, arXiv.org.
    19. Beauchêne, Dorian & Li, Jian & Li, Ming, 2019. "Ambiguous persuasion," Journal of Economic Theory, Elsevier, vol. 179(C), pages 312-365.
    20. Yeon-Koo Che & Weijie Zhong, 2021. "Robustly Optimal Mechanisms for Selling Multiple Goods," Papers 2105.02828, arXiv.org, revised Aug 2022.

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:pen:papers:18-001. 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: Administrator (email available below). General contact details of provider: https://edirc.repec.org/data/deupaus.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.