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Internet Auctions with Many Traders

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  • Michael Peters
  • Sergei Severinov

Abstract

A multi-unit auction environment similar to Ebay is studied. Sellers who wish to sell a single unit of a homogenous good set reserve prices for their own independently run auctions. Buyers who hope to acquire a single unit bid as often as they like in a dynamic second price auction. When the number of buyers and sellers is large but finite, there is a Bayesian equilibrium for this completely decentalized trading procedure in which the ex post efficient set of trades occurs at a uniform trading price. Remarkably, the strategy rules that buyers and sellers use in this equilibrium are very simple. They do not depend in any way on beliefs, or on the number of buyers and sellers.

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Bibliographic Info

Paper provided by University of Toronto, Department of Economics in its series Working Papers with number peters-01-01.

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Length: 31 pages
Date of creation: 11 Feb 2001
Date of revision:
Handle: RePEc:tor:tecipa:peters-01-01

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  1. Roth, Alvin E. & Sotomayor, Marilda, 1992. "Two-sided matching," Handbook of Game Theory with Economic Applications, Elsevier, in: R.J. Aumann & S. Hart (ed.), Handbook of Game Theory with Economic Applications, edition 1, volume 1, chapter 16, pages 485-541 Elsevier.
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  6. Aldo Rustichini, 1992. "Convergence to Efficiency in a Simple Market with Incomplete Information," Discussion Papers, Northwestern University, Center for Mathematical Studies in Economics and Management Science 995, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  7. Satterthwaite, Mark A & Williams, Steven R, 1989. "The Rate of Convergence to Efficiency in the Buyer's Bid Double Auction as the Market Becomes Large," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 56(4), pages 477-98, October.
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  17. Michael Peters & Sergei Severinov, 1995. "Competition Among Sellers who offer Auctions Instead of Prices," Working Papers, University of Toronto, Department of Economics peters-95-02, University of Toronto, Department of Economics.
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