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Jump Bidding and Overconcentration in Decentralized Simultaneous Ascending Auctions

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  • 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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File URL: http://www2.econ.iastate.edu/papers/p3860-2006-11-16.pdf
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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
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Handle: RePEc:isu:genres:12698
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Iowa State University, Dept. of Economics, 260 Heady Hall, Ames, IA 50011-1070

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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. Stefano Lovo & Gian Luigi Albano & Fabrizio Germano, 2006. "Ascending auctions for multiple objects: the case for the Japanese design," Post-Print halshs-00009852, HAL.
  2. Ruqu Wang & Alan Gunderson, 1998. "Signally by Jump Bidding in Private Value Auctions," Working Papers 975, Queen's University, Department of Economics.
  3. Krishna, V. & Rosenthal, R.W., 1995. "Simultaneous Auctions with Synergies," Papers 04-95-06, Pennsylvania State - Department of Economics.
  4. Rodney J. Garratt & Thomas Trˆger & Charles Z. Zheng, 2009. "Collusion via Resale," Econometrica, Econometric Society, vol. 77(4), pages 1095-1136, 07.
  5. Sandro Brusco & Giuseppe Lopomo, 2004. "Collusion via Signalling in Simultaneous Ascending Bid Auctions with Heterogeneous Objects, with and without Complementarities," Levine's Bibliography 122247000000000385, UCLA Department of Economics.
  6. Sandro Brusco & Giuseppe Lopomo, 2005. "Simultaneous Ascending Auctions with Complementarities and Known Budget Constraints," Department of Economics Working Papers 05-13, Stony Brook University, Department of Economics.
  7. Gul, Faruk & Stacchetti, Ennio, 1999. "Walrasian Equilibrium with Gross Substitutes," Journal of Economic Theory, Elsevier, vol. 87(1), pages 95-124, July.
  8. Christopher Avery, 1998. "Strategic Jump Bidding in English Auctions," Review of Economic Studies, Oxford University Press, vol. 65(2), pages 185-210.
  9. 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.
  10. Milgrom,Paul, 2004. "Putting Auction Theory to Work," Cambridge Books, Cambridge University Press, number 9780521536721.
  11. Stefano Lovo & Fabrizio Germano & Gian Luigi Albano, 2001. "A comparison of standard multi-unit auctions with synergies," Post-Print hal-00460031, HAL.
  12. 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.
  13. Gul, Faruk & Stacchetti, Ennio, 2000. "The English Auction with Differentiated Commodities," Journal of Economic Theory, Elsevier, vol. 92(1), pages 66-95, May.
  14. Lawrence M. Ausubel & Paul Milgrom, 2002. "Ascending Auctions with Package Bidding," Working Papers 02004, Stanford University, Department of Economics.
  15. Vijay Krishna & Motty Perry, 1997. "Efficient Mechanism Design," Game Theory and Information 9703010, EconWPA, revised 28 Apr 1998.
  16. Bykowsky, Mark M. & Cull, Robert J. & Ledyard, John O., 1998. "Mutually Destructive Bidding: The FCC Auction Design Problem," Working Papers 916, California Institute of Technology, Division of the Humanities and Social Sciences.
  17. Sandro Brusco & Giuseppe Lopomo, 2004. "Simultaneous Ascending Bid Auctions with Privately Known Budget Constraints," Levine's Bibliography 122247000000000373, UCLA Department of Economics.
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Cited by:

  1. Jeremy Bulow & Jonathan Levin & Paul Milgrom, 2009. "Winning Play in Spectrum Auctions," NBER Working Papers 14765, National Bureau of Economic Research, Inc.
  2. Sandro Brusco & Giuseppe Lopomo, 2005. "Simultaneous Ascending Auctions with Complementarities and Known Budget Constraints," Department of Economics Working Papers 05-13, Stony Brook University, Department of Economics.
  3. 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.
  4. Jacob K. Goeree & Yuanchuan Lien, 2009. "An equilibrium analysis of the simultaneous ascending auction," IEW - Working Papers 428, Institute for Empirical Research in Economics - University of Zurich.

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