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Manipulative Auction Design

  • Philippe Jehiel

This paper considers an auction design framework in which bidders get partial feedback about the distribution of bids submitted in earlier auctions: either bidders are asymmetric but past bids are disclosed in an anonymous way or several auction formats are being used and the distribution of bids but not the associated formats are disclosed. I employ the analogy-based expectation equilibrium (Jehiel, 2005) to model such situations. First-price auction in which past bids are disclosed in an anonymous way generates more revenues than the second-price auction while achieving an efficient outcome in the asymmetric private values two-bidder case with independent distributions. Besides, by using several auction formats with coarse feedback a designer can always extract more revenues than in Myerson's optimal auction, and yet less revenues than in the full information case whenever bidders enjoy ex-post quitting rights and the assignment and payment rules are monotonic in bids. These results suggest an important role of feedback disclosure as a novel instrument in mechanism design.

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Paper provided by UCLA Department of Economics in its series Levine's Bibliography with number 122247000000001547.

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Date of creation: 07 Sep 2007
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Handle: RePEc:cla:levrem:122247000000001547
Contact details of provider: Web page: http://www.dklevine.com/

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  1. Maskin, Eric & Riley, John, 2000. "Asymmetric Auctions," Review of Economic Studies, Wiley Blackwell, vol. 67(3), pages 413-38, July.
  2. David Ettinger & Philippe Jehiel, 2004. "Towards a Theory of Deception," Levine's Bibliography 122247000000000247, UCLA Department of Economics.
  3. John G. Riley & William Samuelson, 1979. "Optimal Auctions," UCLA Economics Working Papers 152, UCLA Department of Economics.
  4. Susan Athey & Philip A. Haile, 2006. "Empirical Models of Auctions," Levine's Bibliography 122247000000001045, UCLA Department of Economics.
  5. Jackson, Matthew O. & Kalai, Ehud, 1997. "Social Learning in Recurring Games," Games and Economic Behavior, Elsevier, vol. 21(1-2), pages 102-134, October.
  6. Philippe Jehiel, 2005. "Analogy-Based Expectation Equilibrium," Levine's Bibliography 784828000000000106, UCLA Department of Economics.
  7. Fudenberg, Drew & Levine, David, 1998. "Learning in games," European Economic Review, Elsevier, vol. 42(3-5), pages 631-639, May.
  8. Philippe Jehiel & Frederic Koessler, 2005. "Revisiting Games of Incomplete Information with Analogy-Based Expectations," THEMA Working Papers 2005-04, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
  9. Harsanyi, John C, 1995. "Games with Incomplete Information," American Economic Review, American Economic Association, vol. 85(3), pages 291-303, June.
  10. Ignacio Esponda, 2008. "Information feedback in first price auctions," RAND Journal of Economics, RAND Corporation, vol. 39(2), pages 491-508.
  11. Philippe Jehiel & Steffen Huck & Tom Rutter, 2007. "Learning Spillover and Analogy-based Expectations: a Multi-Game Experiment," Levine's Bibliography 843644000000000120, UCLA Department of Economics.
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