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Becoming the Neighbor Bidder: Endogenous Winner’s Curse in Dynamic Mechanisms

  • Alejandro Francetich
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    This paper addresses the problem of sequentially allocating timesensitive goods, or one-period leases on a durable good, among agents who compete through time and learn about the common component of the value of the allocation through experience. I show that efficiency is unattainable, and I identify simple variations of sequential second-price or English auctions that implement the second best and the revenuemaximizing auction. When the units are divisible, I also identify the corresponding auctions that allow for double sourcing.Keywords: Dynamic mechanism design, sequential auctions, interdependent values, multi-dimensional types, winner’s curse, double sourcing JEL Classification Numbers: D82, D86

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    File URL: ftp://ftp.igier.unibocconi.it/wp/2013/501.pdf
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    Paper provided by IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University in its series Working Papers with number 501.

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    Date of creation: 2013
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    Handle: RePEc:igi:igierp:501
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    15. Green, Jerry R & Laffont, Jean-Jacques, 1987. "Posterior Implementability in a Two-Person Decision Problem," Econometrica, Econometric Society, vol. 55(1), pages 69-94, January.
    16. Johannes H�rner & Julian Jamison, 2008. "Sequential Common-Value Auctions with Asymmetrically Informed Bidders," Review of Economic Studies, Oxford University Press, vol. 75(2), pages 475-498.
    17. Claudio Mezzetti, 2004. "Mechanism Design with Interdependent Valuations: Efficiency," Econometrica, Econometric Society, vol. 72(5), pages 1617-1626, 09.
    18. Larson, Nathan, 2009. "Private value perturbations and informational advantage in common value auctions," Games and Economic Behavior, Elsevier, vol. 65(2), pages 430-460, March.
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