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The private value single item bisection auction

Author

Listed:
  • Elena Grigorieva

    ()

  • P. Herings

    ()

  • Rudolf Müller

    ()

  • Dries Vermeulen

    ()

Abstract

In this paper we present a new iterative auction, the bisection auction, that can be used for the sale of a single indivisable object. We will show that the bisection auction is computationally more efficient than the classical English auction while it still preserves all characteristics the English auction shares with the Vickrey auction there exists an equilibrium in weakly dominant strategies in wich everyone truthfully reveals his information, the object is allocated in accordance with efficiency requirements to the buyer who has the highest valuation, and the price paid by the winner of the object equals the second-highest valuation.
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Suggested Citation

  • Elena Grigorieva & P. Herings & Rudolf Müller & Dries Vermeulen, 2007. "The private value single item bisection auction," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 30(1), pages 107-118, January.
  • Handle: RePEc:spr:joecth:v:30:y:2007:i:1:p:107-118
    DOI: 10.1007/s00199-005-0032-z
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    References listed on IDEAS

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    1. Engelbrecht-Wiggans, Richard & Kahn, Charles M., 1991. "Protecting the winner : Second-price versus oral auctions," Economics Letters, Elsevier, vol. 35(3), pages 243-248, March.
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    Citations

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    Cited by:

    1. Erlanson, Albin, 2011. "The Multi-item Bisection Auction," Working Papers 2011:31, Lund University, Department of Economics.
    2. Grigorieva, Elena & Strobel, Martin, 2006. "Bidding behavior in the bisection auction – an experimental investigation," Research Memorandum 026, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
    3. Grigorieva Elena & Herings P. Jean-Jacques & Müller Rudolf & Vermeulen Dries, 2007. "On The Fastest Vickrey Algorithm," Research Memorandum 013, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
    4. Albin Erlanson, 2014. "The Duo-Item Bisection Auction," Computational Economics, Springer;Society for Computational Economics, vol. 43(1), pages 15-31, January.
    5. Grigorieva Elena & Herings P. Jean-Jacques & Müller Rudolf & Vermeulen Dries, 2006. "Inefficiency of equilibria in query auctions with continuous valuations," Research Memorandum 017, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
    6. Grigorieva, Elena & Jean-Jacques Herings, P. & Müller, Rudolf & Vermeulen, Dries, 2012. "Fraction auctions: The tradeoff between efficiency and running time," European Journal of Operational Research, Elsevier, vol. 220(2), pages 577-587.
    7. Fleckinger, Pierre, 2008. "Bayesian improvement of the phantom voters rule: An example of dichotomic communication," Mathematical Social Sciences, Elsevier, vol. 55(1), pages 1-13, January.
    8. Ryuji Sano, 2016. "Iterative Revelation Mechanisms," KIER Working Papers 937, Kyoto University, Institute of Economic Research.
    9. Bergemann, Dirk & Wambach, Achim, 2015. "Sequential information disclosure in auctions," Journal of Economic Theory, Elsevier, vol. 159(PB), pages 1074-1095.
    10. Ingebretsen Carlson, Jim, 2016. "An Auction with Approximated Bidder Preferences - When an Auction has to be Quick," Working Papers 2016:12, Lund University, Department of Economics.
    11. Andersson, Tommy & Erlanson, Albin, 2013. "Multi-item Vickrey–English–Dutch auctions," Games and Economic Behavior, Elsevier, vol. 81(C), pages 116-129.
    12. Fadel, Ronald & Segal, Ilya, 2009. "The communication cost of selfishness," Journal of Economic Theory, Elsevier, vol. 144(5), pages 1895-1920, September.
    13. Grigorieva,Elena & Herings,Jean-Jacques & Müller,Rudolf & Vermeulen,Dries, 2004. "The communication complexity of private value single item auctions," Research Memorandum 052, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
    14. Kos, Nenad, 2014. "Asking questions," Games and Economic Behavior, Elsevier, vol. 87(C), pages 642-650.

    More about this item

    Keywords

    Single item auction; Weakly dominant strategy; Extensive form games of incomplete information; Information revelation; Binary search; C72; D44;

    JEL classification:

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

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