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Characterization of bidding behavior in multi-unit auctions

Author

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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. Francisco Alvarez & Francisco J. André, 2013. "Auctioning vs. Grandfathering in Cap-and-Trade Systems with Market Power and Incomplete Information," Working Papers 2013.98, Fondazione Eni Enrico Mattei.
    2. Alvarez, Francisco & André, Francisco J., 2015. "Auctioning emission permits in a leader-follower setting," MPRA Paper 61698, University Library of Munich, Germany.
    3. 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.
    4. Ollikka, Kimmo & Tukiainen, Janne, 2013. "Central bank liquidity auction mechanism design and the interbank market," Research Discussion Papers 21/2013, Bank of Finland.

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