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Auction design with heterogeneous priors

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  • Pham, Hien
  • Yamashita, Takuro

Abstract

We consider an auction design problem with private values, where the seller and bidders may enjoy heterogeneous priors about their (possibly correlated) valuations. Each bidder forms an (interim) belief about the others based on his own prior updated by observing his own value. If the seller faces uncertainty about the bidders' priors, even if he knows that the bidders' priors are within any given distance from his, he may find it worst-case optimal to propose a dominant-strategy auction mechanism.

Suggested Citation

  • Pham, Hien & Yamashita, Takuro, 2024. "Auction design with heterogeneous priors," Games and Economic Behavior, Elsevier, vol. 145(C), pages 413-425.
    • Handle: RePEc:eee:gamebe:v:145:y:2024:i:c:p:413-425
    DOI: 10.1016/j.geb.2024.04.002
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