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Characterization of bidding behavior in multi-unit auctions

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  • de Castro, Luciano I.
  • Riascos, Alvaro

Abstract

This paper considers a very general class of single or multi-unit auctions of indivisible objects. The model allows for interdependent values, multidiminensional types and any attitude towards risk. Assuming only optimal behavior, we prove that each bid is chosen in order to equalize the marginal benefit to the marginal cost of bidding. This generalizes many existing results in the literature. We use this characterization to obtain sufficient conditions for truthful bidding, monotonic best reply strategies and identification results for multi-unit auctions.

Suggested Citation

  • de Castro, Luciano I. & Riascos, Alvaro, 2009. "Characterization of bidding behavior in multi-unit auctions," Journal of Mathematical Economics, Elsevier, vol. 45(9-10), pages 559-575, September.
    • Handle: RePEc:eee:mateco:v:45:y:2009:i:9-10:p:559-575
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    References listed on IDEAS

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    Cited by:

    1. Jorge Balat & Juan E. Carranza & Juan D. Martin, 2015. "Dynamic and Strategic Behavior in Hydropower-Dominated Electricity Markets: Empirical Evidence for Colombia," Borradores de Economia 12906, Banco de la Republica.
    2. Kastl, Jakub, 2012. "On the properties of equilibria in private value divisible good auctions with constrained bidding," Journal of Mathematical Economics, Elsevier, vol. 48(6), pages 339-352.
    3. Miguel A. Espinosa & Alvaro J. Riascos Villegas, 2010. "Strategic Behaviour, Resource Valuation and Competition in Electricity Markets," Documentos CEDE 6856, Universidad de los Andes, Facultad de Economía, CEDE.
    4. Perez, Alex & Garcia-Rendon, John J., 2021. "Integration of non-conventional renewable energy and spot price of electricity: A counterfactual analysis for Colombia," Renewable Energy, Elsevier, vol. 167(C), pages 146-161.
    5. Alvarez, Francisco & André, Francisco J., 2013. "Auctioning vs. Grandfathering in Cap-and-Trade Systems with Market Power and Incomplete Information," Climate Change and Sustainable Development 162381, Fondazione Eni Enrico Mattei (FEEM).
    6. Alvarez, Francisco & André, Francisco J., 2015. "Auctioning emission permits in a leader-follower setting," MPRA Paper 61698, University Library of Munich, Germany.
    7. John J. García Rendón & Alex F. P�rez-Libreros, 2019. "El precio spot de la electricidad y la inclusión de energía renovable no convencional: evidencia para Colombia," Documentos de Trabajo de Valor Público 17393, Universidad EAFIT.
    8. Ollikka, Kimmo & Tukiainen, Janne, 2013. "Central bank liquidity auction mechanism design and the interbank market," Research Discussion Papers 21/2013, Bank of Finland.
    9. Ollikka, Kimmo & Tukiainen, Janne, 2013. "Central bank liquidity auction mechanism design and the interbank market," Bank of Finland Research Discussion Papers 21/2013, Bank of Finland.
    10. Ali Hortacsu & Jakub Kastl, "undated". "Informational Advantage and Information Structure: An Analysis of Canadian Treasury Auctions," Discussion Papers 09-031, Stanford Institute for Economic Policy Research.
    11. Francisco Álvarez & Francisco André, 2015. "Auctioning Versus Grandfathering in Cap-and-Trade Systems with Market Power and Incomplete Information," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 62(4), pages 873-906, December.

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