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Symmetric Auctions

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  • Rahul Deb
  • Mallesh Pai

Abstract

Practical or legal constraints often restrict auctions to being symmetric (anonymous and nondiscriminatory). We examine when this restriction prevents a seller from achieving his objectives. In an independent private value setting with heterogenous buyers, we characterize the set of incentive compatible and individually rational outcomes that can be implemented via a symmetric auction. We show that symmetric auctions can yield many discriminatory outcomes such as revenue maximization and affirmative action. We also characterize the set of implementable outcomes when individual rationality holds ex-post rather than in expectation. This additional requirement may prevent the seller from maximizing revenue.

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Bibliographic Info

Paper provided by University of Toronto, Department of Economics in its series Working Papers with number tecipa-486.

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Length: Unknown pages
Date of creation: 13 May 2013
Date of revision:
Handle: RePEc:tor:tecipa:tecipa-486

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Keywords: symmetric auctions; implementation; indirect mechanisms; optimal auctions;

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References

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  1. Jonathan Levin & Susan Athey, 2007. "Set-Asides and Subsidies in Auctions," 2007 Meeting Papers, Society for Economic Dynamics 571, Society for Economic Dynamics.
  2. Mallesh Pai & Rakesh Vohra, 2012. "Auction Design with Fairness Concerns: Subsidies vs. Set-Asides," Discussion Papers, Northwestern University, Center for Mathematical Studies in Economics and Management Science 1548, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  3. McAfee, R. Preston & McMillan, John, 1989. "Government procurement and international trade," Journal of International Economics, Elsevier, Elsevier, vol. 26(3-4), pages 291-308, May.
  4. Cantillon, Estelle, 2008. "The effect of bidders' asymmetries on expected revenue in auctions," Games and Economic Behavior, Elsevier, Elsevier, vol. 62(1), pages 1-25, January.
  5. Andrew Schotter & Allan Corns, 1999. "Can Affirmative Action Be Cost Effective? An Experimental Examination of Price-Preference Auctions," American Economic Review, American Economic Association, American Economic Association, vol. 89(1), pages 291-305, March.
  6. René Kirkegaard, 2012. "A Mechanism Design Approach to Ranking Asymmetric Auctions," Econometrica, Econometric Society, Econometric Society, vol. 80(5), pages 2349-2364, 09.
  7. Mares, Vlad & Swinkels, Jeroen M., 2011. "Near-optimality of second price mechanisms in a class of asymmetric auctions," Games and Economic Behavior, Elsevier, Elsevier, vol. 72(1), pages 218-241, May.
  8. Border, Kim C, 1991. "Implementation of Reduced Form Auctions: A Geometric Approach," Econometrica, Econometric Society, Econometric Society, vol. 59(4), pages 1175-87, July.
  9. Jason D. Hartline, 2012. "Approximation in Mechanism Design," American Economic Review, American Economic Association, American Economic Association, vol. 102(3), pages 330-36, May.
  10. Maskin, Eric S & Riley, John G, 1984. "Optimal Auctions with Risk Averse Buyers," Econometrica, Econometric Society, Econometric Society, vol. 52(6), pages 1473-1518, November.
  11. Zheng, Charles Zhoucheng, 2002. "Optimal Auction with Resale," Staff General Research Papers, Iowa State University, Department of Economics 12664, Iowa State University, Department of Economics.
  12. Alejandro M. Manelli & Daniel R. Vincent, 2010. "Bayesian and Dominant‐Strategy Implementation in the Independent Private‐Values Model," Econometrica, Econometric Society, Econometric Society, vol. 78(6), pages 1905-1938, November.
  13. Eric Maskin, 1998. "Nash Equilibrium and Welfare Optimality," Harvard Institute of Economic Research Working Papers, Harvard - Institute of Economic Research 1829, Harvard - Institute of Economic Research.
  14. Maskin, Eric & Riley, John, 2000. "Asymmetric Auctions," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 67(3), pages 413-38, July.
  15. Alex Gershkov & Jacob K. Goeree & Alexey Kushnir & Benny Moldovanu & Xianwen Shi, 2013. "On the Equivalence of Bayesian and Dominant Strategy Implementation," Econometrica, Econometric Society, Econometric Society, vol. 81(1), pages 197-220, 01.
  16. Bernard Caillaud & Jacques Robert, 2005. "Implementation of the revenue-maximizing auction by an ignorant seller," Review of Economic Design, Springer, Springer, vol. 9(2), pages 127-143, 04.
  17. Ian Ayres & Peter Cramton, 1996. "Deficit Reduction Through Diversity: How Affirmative Action at the FCC Increased Auction Competition," Papers of Peter Cramton 96slr, University of Maryland, Department of Economics - Peter Cramton, revised 09 Jun 1998.
  18. Mierendorff, Konrad, 2011. "Asymmetric reduced form Auctions," Economics Letters, Elsevier, Elsevier, vol. 110(1), pages 41-44, January.
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