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Internet auctions with many traders

Listed author(s):
  • Peters,M.
  • Severinov,S.

    (University of Wisconsin-Madison, Social Systems Research Institute)

A multi-unit auction environment similar to Ebay is studied. Sellers who wish to sell a single unit of a homogenous good set reserve prices for their own independently run auctions. Buyers who hope to acquire a single unit bid as often as they like in a dynamic second price auction. When the number of buyers and sellers is large but finite, there is a Bayesian equilibrium for this completely decentalized trading procedure in which the ex post efficient set of trades occurs at a uniform trading price. Remarkably, the strategy rules that buyers and sellers use in this equilibrium are very simple. They do not depend in any way on beliefs, or on the number of buyers and sellers.

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File URL: http://www.ssc.wisc.edu/econ/archive/wp2001-11.pdf
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Paper provided by Wisconsin Madison - Social Systems in its series Working papers with number 11.

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Date of creation: 2001
Handle: RePEc:att:wimass:200111
Contact details of provider: Postal:
UNIVERSITY OF WISCONSIN MADISON, SOCIAL SYSTEMS RESEARCH INSTITUTE(S.S.R.I.), MADISON WISCONSIN 53706 U.S.A.

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