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Asymmetric First-Price Menu Auctions under Intricate Uncertainty

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  • Han, Seungjin

Abstract

This 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 specifi es 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 o ffered 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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File URL: http://socserv.mcmaster.ca/han/research/FPM.pdf
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Bibliographic Info

Paper provided by Vancouver School of Economics in its series Microeconomics.ca working papers with number seungjin_han-2011-9.

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Length: 34 pages
Date of creation: 25 May 2011
Date of revision: 02 Apr 2013
Handle: RePEc:ubc:pmicro:seungjin_han-2011-9

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Web page: http://www.economics.ubc.ca/

Related research

Keywords: first-price menu auction; interdependent values; monotone equilibria; joint ex-post renegotiation-proofness; ex-ante robustness;

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References

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  1. Partha Dasgupta & Eric Maskin, 2000. "Efficient Auctions," The Quarterly Journal of Economics, MIT Press, vol. 115(2), pages 341-388, May.
  2. Yeon-Koo Che, 1993. "Design Competition through Multidimensional Auctions," RAND Journal of Economics, The RAND Corporation, vol. 24(4), pages 668-680, Winter.
  3. Milgrom, P. & Shannon, C., 1991. "Monotone Comparative Statics," Papers 11, Stanford - Institute for Thoretical Economics.
  4. Bernheim, B Douglas & Whinston, Michael D, 1986. "Menu Auctions, Resource Allocation, and Economic Influence," The Quarterly Journal of Economics, MIT Press, vol. 101(1), pages 1-31, February.
  5. Fernando Branco, 1997. "The Design of Multidimensional Auctions," RAND Journal of Economics, The RAND Corporation, vol. 28(1), pages 63-81, Spring.
  6. Milgrom, Paul R & Weber, Robert J, 1982. "A Theory of Auctions and Competitive Bidding," Econometrica, Econometric Society, vol. 50(5), pages 1089-1122, September.
  7. Maskin, Eric & Riley, John, 2000. "Equilibrium in Sealed High Bid Auctions," Review of Economic Studies, Wiley Blackwell, vol. 67(3), pages 439-54, July.
  8. Philip J. Reny & Shmuel Zamir, 2004. "On the Existence of Pure Strategy Monotone Equilibria in Asymmetric First-Price Auctions," Econometrica, Econometric Society, vol. 72(4), pages 1105-1125, 07.
  9. repec:fth:eeccou:145 is not listed on IDEAS
  10. Maskin, Eric & Riley, John, 2000. "Asymmetric Auctions," Review of Economic Studies, Wiley Blackwell, vol. 67(3), pages 413-38, July.
  11. Asker, John & Cantillon, Estelle, 2004. "Properties of Scoring Auctions," CEPR Discussion Papers 4734, C.E.P.R. Discussion Papers.
  12. David McAdams, 2006. "Monotone Equilibrium in Multi-Unit Auctions," Review of Economic Studies, Oxford University Press, vol. 73(4), pages 1039-1056.
  13. Athey, S., 1997. "Sigle Crossing Properties and the Existence of Pure Strategy Equilibria in Games of Incomplete Information," Working papers 97-11, Massachusetts Institute of Technology (MIT), Department of Economics.
  14. Han, Seungjin, 2007. "Strongly robust equilibrium and competing-mechanism games," Journal of Economic Theory, Elsevier, vol. 137(1), pages 610-626, November.
  15. René Kirkegaard, 2012. "A Mechanism Design Approach to Ranking Asymmetric Auctions," Econometrica, Econometric Society, vol. 80(5), pages 2349-2364, 09.
  16. Matthew O. Jackson & Jeroen M. Swinkels, 2005. "Existence of Equilibrium in Single and Double Private Value Auctions," Econometrica, Econometric Society, vol. 73(1), pages 93-139, 01.
  17. Philip J. Reny, 2011. "On the Existence of Monotone Pure‐Strategy Equilibria in Bayesian Games," Econometrica, Econometric Society, vol. 79(2), pages 499-553, 03.
  18. Dixit, Avinash & Grossman, Gene M. & Helpman, Elhanan, 1997. "Common Agency and Coordination: General Theory and Application to Government Policy Making," Scholarly Articles 3450061, Harvard University Department of Economics.
  19. repec:ulb:ulbeco:2013/8999 is not listed on IDEAS
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