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Auction Design Without Commitment

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  • Hannu Vartiainen

Abstract

We study auction design when parties cannot commit to the mechanism. The seller may change the rules of the game any number of times and the buyers may choose their outside option at any stage of the game. A dynamic consistency condition and an optimality condition property are defined to characterize the seller's mechanism selection behavior. The unique stationary mechanism selection rule that meets the conditions is the English auction.
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Suggested Citation

  • Hannu Vartiainen, 2013. "Auction Design Without Commitment," Journal of the European Economic Association, European Economic Association, vol. 11(2), pages 316-342, April.
  • Handle: RePEc:bla:jeurec:v:11:y:2013:i:2:p:316-342
    DOI: jeea.12009
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    Cited by:

    1. Dirk Bergemann & Benjamin Brooks & Stephen Morris, 2016. "Selling to Intermediaries: Optimal Auction Design in a Common Value Model," Cowles Foundation Discussion Papers 2064R, Cowles Foundation for Research in Economics, Yale University, revised Jul 2017.
    2. Skreta, Vasiliki, 2015. "Optimal auction design under non-commitment," Journal of Economic Theory, Elsevier, vol. 159(PB), pages 854-890.
    3. Leonardo Rezende, 2009. "Biased procurement auctions," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 38(1), pages 169-185, January.
    4. Chia-Hui Chen & Junichiro Ishida, 2013. "Auctions Versus Negotiations: The Role of Price Discrimination," ISER Discussion Paper 0873, Institute of Social and Economic Research, Osaka University.
    5. Todd R. Kaplan & Shmuel Zamir, 2014. "Advances in Auctions," Discussion Papers 1405, Exeter University, Department of Economics.
    6. Gretschko, Vitali & Wambach, Achim, 2017. "Contract Design With Limited Commitment," Annual Conference 2017 (Vienna): Alternative Structures for Money and Banking 168269, Verein für Socialpolitik / German Economic Association.
    7. Gretschko, Vitali & Wambach, Achim, 2017. "Contract (re-)negotiation with private and common values," ZEW Discussion Papers 17-056, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    8. Onur A. Koska & Ilke Onur & Frank Stähler, 2015. "The Scope of Auctions in the Presence of Downstream Interactions and Information Externalities," CESifo Working Paper Series 5256, CESifo Group Munich.
    9. Qingmin Liu & Konrad Mierendorff & Xianwen Shi, 2013. "Auctions with Limited Commitment," Working Papers tecipa-504, University of Toronto, Department of Economics.
    10. David McAdams & Michael Schwarz, 2007. "Credible Sales Mechanisms and Intermediaries," American Economic Review, American Economic Association, vol. 97(1), pages 260-276, March.
    11. Kaplan, Todd R. & Zamir, Shmuel, 2015. "Advances in Auctions," Handbook of Game Theory with Economic Applications, Elsevier.
    12. Gretschko, Vitali & Wambach, Achim, 2015. "Common Values and the Coase Conjecture: Inefficiencies in Frictionless Contract (Re-)Negotiation," Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 113064, Verein für Socialpolitik / German Economic Association.
    13. Kei Kawakami, 2016. "Posterior renegotiation-proofness in a two-person decision problem," International Journal of Game Theory, Springer;Game Theory Society, vol. 45(4), pages 893-931, November.
    14. Lamping, Jennifer, 2008. "The Value of Commitment in Auctions with Matching," MPRA Paper 24373, University Library of Munich, Germany.

    More about this item

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation

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