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Large Auction Design in Dominance

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  • Hitoshi Matsushima

    (Faculty of Economics, The University of Tokyo)

Abstract

This paper shows a detail-free idea of multi-object large double auction design in general trading environments, where the auctioneer randomly divides agents into two groups, and agents in each group trade at the market-clearing price vector in the other group. With private values, any dominant strategy profile mimics price-taking behavior, and the auctioneer achieves approximate efficiency. With interdependent values, any twice iteratively undominated strategy profile mimics fully revealing rational expectations equilibrium, and the auctioneer approximately achieves ex post efficiency. We need only a very weak common knowledge assumption on rationality.

Suggested Citation

  • Hitoshi Matsushima, 2004. "Large Auction Design in Dominance," CARF F-Series CARF-F-007, Center for Advanced Research in Finance, Faculty of Economics, The University of Tokyo.
  • Handle: RePEc:cfi:fseres:cf007
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    File URL: http://www.carf.e.u-tokyo.ac.jp/pdf/workingpaper/fseries/11.pdf
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    References listed on IDEAS

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    1. Lucas, Robert Jr., 1972. "Expectations and the neutrality of money," Journal of Economic Theory, Elsevier, vol. 4(2), pages 103-124, April.
    2. McAfee, R. Preston, 1992. "A dominant strategy double auction," Journal of Economic Theory, Elsevier, vol. 56(2), pages 434-450, April.
    3. William Vickrey, 1961. "Counterspeculation, Auctions, And Competitive Sealed Tenders," Journal of Finance, American Finance Association, vol. 16(1), pages 8-37, March.
    4. Gibbard, Allan, 1977. "Manipulation of Schemes That Mix Voting with Chance," Econometrica, Econometric Society, vol. 45(3), pages 665-681, April.
    5. Rustichini, Aldo & Satterthwaite, Mark A & Williams, Steven R, 1994. "Convergence to Efficiency in a Simple Market with Incomplete Information," Econometrica, Econometric Society, vol. 62(5), pages 1041-1063, September.
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    Cited by:

    1. Hitoshi Matsushima, 2005. "On Detail-Free Mechanism Design And Rationality," The Japanese Economic Review, Japanese Economic Association, vol. 56(1), pages 41-54.

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