An Ascending Auction for Independent Values: Uniqueness and Robustness to Strategic Uncertainty
We consider an single object auction environment with interdependent valuations and a generalized Vickrey-Clark-Groves allocation mechanism that allocates the object almost efficiently in a strict ex post equilibrium. If there is a significant amount of interdependence, there are multiple rationalizable outcomes of this direct mechanism and any other mechanism that allocates the object almost efficiently. This is true whether the agents know about each others' payoff types or not. We consider an ascending price dynamic version of the generalized VCG mechanism. When there is complete information among the agents of their payoff types, we show that the almost efficient allocation is the unique backward induction (i.e., extensive form rationalizable) outcome of the auction, even when there are multiple rationalizable outcomes in the static version. This example illustrates the role that open auctions may play in obtaining efficient allocations by reducing strategic uncertainty.
|Date of creation:||Jan 2007|
|Date of revision:||Mar 2007|
|Publication status:||Published in American Economic Review Papers and Proceedings (May 2007), 97(2): 125-130|
|Contact details of provider:|| Postal: |
Phone: (203) 432-3702
Fax: (203) 432-6167
Web page: http://cowles.econ.yale.edu/
More information through EDIRC
|Order Information:|| Postal: Cowles Foundation, Yale University, Box 208281, New Haven, CT 06520-8281 USA|
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Guillermo Caruana & Liran Einav, 2008. "A Theory of Endogenous Commitment," Review of Economic Studies, Oxford University Press, vol. 75(1), pages 99-116.
- Gale, D., 1992.
"Dynamic Coordiantion Games,"
13, Boston University - Department of Economics.
- P. Dasgupta & Eric Maskin, 1998.
Harvard Institute of Economic Research Working Papers
1857, Harvard - Institute of Economic Research.
- Paul Milgrom & Robert J. Weber, 1981.
"A Theory of Auctions and Competitive Bidding,"
447R, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Brandenburger, Adam & Dekel, Eddie, 1987. "Rationalizability and Correlated Equilibria," Econometrica, Econometric Society, vol. 55(6), pages 1391-1402, November.
- Dirk Bergemann & Stephen Morris, 2006.
"Robust Implementation: The Case of Direct Mechanisms,"
Cowles Foundation Discussion Papers
1561, Cowles Foundation for Research in Economics, Yale University.
- Dirk Bergemann & Stephen Morris, 2006. "Robust Implementation: The Case of Direct Mechanisms," Levine's Bibliography 122247000000001194, UCLA Department of Economics.
- Dirk Bergemann & Stephen Morris, 2006. "Robust Implementation: The Case of Direct Mechanisms"," Cowles Foundation Discussion Papers 1561R, Cowles Foundation for Research in Economics, Yale University, revised May 2007.
- Moore, John & Repullo, Rafael, 1988. "Subgame Perfect Implementation," Econometrica, Econometric Society, vol. 56(5), pages 1191-1220, September.
- Abreu, Dilip & Sen, Arunava, 1990. "Subgame perfect implementation: A necessary and almost sufficient condition," Journal of Economic Theory, Elsevier, vol. 50(2), pages 285-299, April.
- Pearce, David G, 1984. "Rationalizable Strategic Behavior and the Problem of Perfection," Econometrica, Econometric Society, vol. 52(4), pages 1029-50, July.
When requesting a correction, please mention this item's handle: RePEc:cwl:cwldpp:1600. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Glena Ames)
If references are entirely missing, you can add them using this form.