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Internet Auctions with Many Traders

  • Michael Peters
  • Sergei Severinov

A multi-unit auction environment similar to Ebay is studied. Sellers who wish to sell a single unit of a homogenous good set reserve prices for their own independently run auctions. Buyers who hope to acquire a single unit bid as often as they like in a dynamic second price auction. When the number of buyers and sellers is large but finite, there is a Bayesian equilibrium for this completely decentalized trading procedure in which the ex post efficient set of trades occurs at a uniform trading price. Remarkably, the strategy rules that buyers and sellers use in this equilibrium are very simple. They do not depend in any way on beliefs, or on the number of buyers and sellers.

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Paper provided by University of Toronto, Department of Economics in its series Working Papers with number peters-01-01.

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Length: 31 pages
Date of creation: 11 Feb 2001
Date of revision:
Handle: RePEc:tor:tecipa:peters-01-01
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  19. Aldo Rustichini, 1992. "Convergence to Efficiency in a Simple Market with Incomplete Information," Discussion Papers 995, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
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