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Jump Bidding and Overconcentration in Decentralized Simultaneous Ascending Auctions

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Listed author(s):
  • Zheng, Charles Zhoucheng

Abstract

A model of English auction that allows jump bidding is proposed. When two objects are sold separately via such English auctions, I construct an equilibrium such that bidders signal via jump bids, thereby forming rational expectations of the prices without relying on any central mediator. This equilibrium eliminates the exposure problem for a bidder whose valuation function is superadditive. Consequently, the auction game overly concentrates the goods to a multi-item bidder and never overly diffuses them to single-item bidders.

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Paper provided by Iowa State University, Department of Economics in its series Staff General Research Papers Archive with number 12698.

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Date of creation: 16 Nov 2006
Handle: RePEc:isu:genres:12698
Contact details of provider: Postal:
Iowa State University, Dept. of Economics, 260 Heady Hall, Ames, IA 50011-1070

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Fax: +1 515.294.0221
Web page: http://www.econ.iastate.edu
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Keywords: complementarity; auction; multiple object aucrtions; simultaneous auctions; synergy; exposure problem; threshold problem;

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Find related papers by JEL classification:
  • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
  • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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  1. Sandro Brusco & Giuseppe Lopomo, 2002. "Collusion via Signalling in Simultaneous Ascending Bid Auctions with Heterogeneous Objects, with and without Complementarities," Review of Economic Studies, Oxford University Press, vol. 69(2), pages 407-436.
  2. Sandro Brusco & Giuseppe Lopomo, 2009. "Simultaneous ascending auctions with complementarities and known budget constraints," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 38(1), pages 105-124, January.
  3. Paul Milgrom, 2000. "Putting Auction Theory to Work: The Simultaneous Ascending Auction," Journal of Political Economy, University of Chicago Press, vol. 108(2), pages 245-272, April.
  4. Rosenthal, Robert W. & Wang, Ruqu, 1996. "Simultaneous Auctions with Synergies and Common Values," Games and Economic Behavior, Elsevier, vol. 17(1), pages 32-55, November.
  5. Bykowsky, Mark M & Cull, Robert J & Ledyard, John O, 2000. "Mutually Destructive Bidding: The FCC Auction Design Problem," Journal of Regulatory Economics, Springer, vol. 17(3), pages 205-228, May.
  6. Rodney J. Garratt & Thomas Trˆger & Charles Z. Zheng, 2009. "Collusion via Resale," Econometrica, Econometric Society, vol. 77(4), pages 1095-1136, 07.
  7. Albano, Gian Luigi & Germano, Fabrizio & Lovo, Stefano, 2001. "A comparison of standard multi-unit auctions with synergies," Economics Letters, Elsevier, vol. 71(1), pages 55-60, April.
  8. Ausubel Lawrence M & Milgrom Paul R, 2002. "Ascending Auctions with Package Bidding," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 1(1), pages 1-44, August.
  9. Gul, Faruk & Stacchetti, Ennio, 2000. "The English Auction with Differentiated Commodities," Journal of Economic Theory, Elsevier, vol. 92(1), pages 66-95, May.
  10. Gul, Faruk & Stacchetti, Ennio, 1999. "Walrasian Equilibrium with Gross Substitutes," Journal of Economic Theory, Elsevier, vol. 87(1), pages 95-124, July.
  11. Krishna, Vijay & Rosenthal, Robert W., 1996. "Simultaneous Auctions with Synergies," Games and Economic Behavior, Elsevier, vol. 17(1), pages 1-31, November.
  12. Christopher Avery, 1998. "Strategic Jump Bidding in English Auctions," Review of Economic Studies, Oxford University Press, vol. 65(2), pages 185-210.
  13. Milgrom,Paul, 2004. "Putting Auction Theory to Work," Cambridge Books, Cambridge University Press, number 9780521536721.
  14. Vijay Krishna & Motty Perry, 1997. "Efficient Mechanism Design," Game Theory and Information 9703010, EconWPA, revised 28 Apr 1998.
  15. Gian Albano & Fabrizio Germano & Stefano Lovo, 2006. "Ascending auctions for multiple objects: the case for the Japanese design," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 28(2), pages 331-355, 06.
  16. Sandro Brusco & Giuseppe Lopomo, 2004. "Simultaneous Ascending Bid Auctions with Privately Known Budget Constraints," Levine's Bibliography 122247000000000373, UCLA Department of Economics.
  17. Ruqu Wang & Alan Gunderson, 1998. "Signally by Jump Bidding in Private Value Auctions," Working Papers 975, Queen's University, Department of Economics.
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Cited by:

  1. Sandro Brusco & Giuseppe Lopomo, 2009. "Simultaneous ascending auctions with complementarities and known budget constraints," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 38(1), pages 105-124, January.
  2. Goeree, Jacob K. & Lien, Yuanchuan, 2014. "An equilibrium analysis of the simultaneous ascending auction," Journal of Economic Theory, Elsevier, vol. 153(C), pages 506-533.
  3. Jeremy Bulow & Jonathan Levin & Paul Milgrom, 2009. "Winning Play in Spectrum Auctions," Discussion Papers 08-023, Stanford Institute for Economic Policy Research.
  4. Lavi, Ron & Oren, Sigal, 2012. "Side-communication yields efficiency of ascending auctions: The two-items case," Games and Economic Behavior, Elsevier, vol. 76(2), pages 439-456.

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