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On the optimality of not allocating

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  • Hernando-Veciana, Ángel
  • Michelucci, Fabio

Abstract

We show that the commitment to not allocate may be exploited by a seller/social planner to increase the expected social surplus that can be achieved in the sale of an indivisible unit.

Suggested Citation

  • Hernando-Veciana, Ángel & Michelucci, Fabio, 2014. "On the optimality of not allocating," Economics Letters, Elsevier, vol. 125(2), pages 233-235.
  • Handle: RePEc:eee:ecolet:v:125:y:2014:i:2:p:233-235
    DOI: 10.1016/j.econlet.2014.09.016
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    References listed on IDEAS

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    1. Roger B. Myerson, 1981. "Optimal Auction Design," Mathematics of Operations Research, INFORMS, vol. 6(1), pages 58-73, February.
    2. Alexey Kushnir, 2013. "On the equivalence between Bayesian and dominant strategy implementation: the case of correlated types," ECON - Working Papers 129, Department of Economics - University of Zurich.
    3. Jehiel, Philippe & Moldovanu, Benny & Stacchetti, Ennio, 1996. "How (Not) to Sell Nuclear Weapons," American Economic Review, American Economic Association, vol. 86(4), pages 814-829, September.
    4. Dewatripont,Mathias & Hansen,Lars Peter & Turnovsky,Stephen J. (ed.), 2003. "Advances in Economics and Econometrics," Cambridge Books, Cambridge University Press, number 9780521818728.
    5. Angel Hernando-Veciana & Fabio Michelucci, 2013. "Do Not Panic: How to Avoid Inefficient Rushes Using Multi-Stage Auctions," CERGE-EI Working Papers wp489, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
    6. Alex Gershkov & Jacob K. Goeree & Alexey Kushnir & Benny Moldovanu & Xianwen Shi, 2013. "On the Equivalence of Bayesian and Dominant Strategy Implementation," Econometrica, Econometric Society, vol. 81(1), pages 197-220, January.
    7. Dewatripont,Mathias & Hansen,Lars Peter & Turnovsky,Stephen J. (ed.), 2003. "Advances in Economics and Econometrics," Cambridge Books, Cambridge University Press, number 9780521524131.
    8. Dewatripont,Mathias & Hansen,Lars Peter & Turnovsky,Stephen J. (ed.), 2003. "Advances in Economics and Econometrics," Cambridge Books, Cambridge University Press, number 9780521818735.
    9. Dewatripont,Mathias & Hansen,Lars Peter & Turnovsky,Stephen J. (ed.), 2003. "Advances in Economics and Econometrics," Cambridge Books, Cambridge University Press, number 9780521524124.
    10. Partha Dasgupta & Eric S. Maskin, 2007. "Bargaining and Destructive Power," Annals of Economics and Finance, Society for AEF, vol. 8(2), pages 217-227, November.
    11. Mathias Dewatripont & Lars Peter Hansen & Stephen Turnovsky, 2003. "Advances in economics and econometrics :theory and applications," ULB Institutional Repository 2013/9557, ULB -- Universite Libre de Bruxelles.
    12. Dewatripont,Mathias & Hansen,Lars Peter & Turnovsky,Stephen J. (ed.), 2003. "Advances in Economics and Econometrics," Cambridge Books, Cambridge University Press, number 9780521818742.
    13. Mathias Dewatripont & Lars Peter Hansen & Stephen Turnovsky, 2003. "Advances in Economics and Econometrics: Theory and Applications, Eighth World Congress," ULB Institutional Repository 2013/176003, ULB -- Universite Libre de Bruxelles.
    14. Dewatripont,Mathias & Hansen,Lars Peter & Turnovsky,Stephen J. (ed.), 2003. "Advances in Economics and Econometrics," Cambridge Books, Cambridge University Press, number 9780521524117.
    15. Hernando-Veciana, Ángel & Michelucci, Fabio, 2011. "Second best efficiency and the English auction," Games and Economic Behavior, Elsevier, vol. 73(2), pages 496-506.
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    Cited by:

    1. Goeree, Jacob K. & Kushnir, Alexey, 2016. "Reduced form implementation for environments with value interdependencies," Games and Economic Behavior, Elsevier, vol. 99(C), pages 250-256.

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    More about this item

    Keywords

    Efficiency; Auctions; Mechanism design;
    All these keywords.

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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