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Core-stable rings in second price auctions with common values

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  • Forges, Françoise
  • Orzach, Ram

Abstract

In a common value auction in which the information partitions of the bidders are connected, all rings are core-stable. More precisely, the ex ante expected utilities of rings, at the (noncooperative) sophisticated equilibrium proposed by Einy et al. [Einy, E., Haimanko, O., Orzach, R., Sela, A., 2002. Dominance solvability of second-prices auctions with differential information. Journal of Mathematical Economics 37, 247–258], describe a cooperative games in characteristic function form, in spite of the underlying strategic externalities. A ring is core-stable if the core of this characteristic function is not empty. Furthermore, every ring can implement its sophisticated equilibrium strategy by means of an incentive compatible mechanism. An example shows that, if the bidders’ information partitions are not connected, rings may no longer be core-stable.

Suggested Citation

  • Forges, Françoise & Orzach, Ram, 2011. "Core-stable rings in second price auctions with common values," Journal of Mathematical Economics, Elsevier, vol. 47(6), pages 760-767.
  • Handle: RePEc:eee:mateco:v:47:y:2011:i:6:p:760-767
    DOI: 10.1016/j.jmateco.2011.10.006
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    Cited by:

    1. Ezra Einy & Ori Haimanko & Diego Moreno & Aner Sela & Benyamin Shitovitz, 2013. "Tullock Contests With Asymmetric Information," Working Papers 1303, Ben-Gurion University of the Negev, Department of Economics.
    2. Ezra Einy & Mridu Prabal Goswami & Ori Haimanko & Ram Orzach & Aner Sela, 2017. "Common-value all-pay auctions with asymmetric information," International Journal of Game Theory, Springer;Game Theory Society, vol. 46(1), pages 79-102, March.
    3. Aner Sela & Ezra Einy & 0ri Haimanko & Diego Moreno & Avishay Aiche & Benyamin Shitovitz, 2016. "Information Advantage in Common-Value Classic Tullock Contests," Working Papers 1614, Ben-Gurion University of the Negev, Department of Economics.
    4. José A. Rodrigues‐Neto, 2015. "Monotonic Knowledge Models, Cycles, Linear Versions and Auctions with Differential, Finite Information," The Economic Record, The Economic Society of Australia, vol. 91(S1), pages 25-37, June.
    5. Einy, Ezra & Haimanko, Ori & Orzach, Ram & Sela, Aner, 2014. "Common-Value All-Pay Auctions with Asymmetric Information and Bid Caps," CEPR Discussion Papers 10173, C.E.P.R. Discussion Papers.
    6. Jonathan Newton, 2019. "Agency Equilibrium," Games, MDPI, Open Access Journal, vol. 10(1), pages 1-15, March.
    7. Ezra Einy & Ori Haimanko & Ram Orzach & Aner Sela, 2016. "Common-value all-pay auctions with asymmetric information and bid caps," International Journal of Game Theory, Springer;Game Theory Society, vol. 45(1), pages 63-88, March.

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    More about this item

    Keywords

    Auctions; Bayesian game; Collusion; Core; Partition form game; Characteristic function;
    All these keywords.

    JEL classification:

    • C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions

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