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Questions tagged [auctions]

Procedures in which participants submit bids, with resources being allocated among bidders in accordance with some pre-specified rule.

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2 votes
2 answers
237 views

Mechanism design making the Government reveil its indiferrence price towards goods

In order to Tax non-monetary property and wealth the government sets an arbitrary price (they are not even personalized assesments) and often people transact below that price. I have bought and sold ...
1 vote
2 answers
155 views

Multi dimensional Auction in economics

I am following this paper . They have different suppliers and one buyer and They are using auction to select best suppliers Suppliers will submit. suppliers offer a multidimensional bidding on quality ...
2 votes
2 answers
271 views

All-pay auction question problem

In a sealed bid all pay auction, the highest bidder receives the good but every buyer pays the seller the amount of her bid regardless of whether she wins. Suppose there are two bidders whose ...
7 votes
1 answer
137 views

Auction mechanism with no trusted third-party

I have been using a double-auction mechanism to solve a two-sided market where multiple agents are competing to supply/use slices of a shared resource. The owner of the resource is a trustable third-...
2 votes
1 answer
194 views

Best-responding to a stochastically higher distribution of bids

In Auction Theory, Krishna writes that: a bidder who faces a stochastically higher distribution of bids–in the sense of reverse hazard rate dominance–will bid higher (This follows the proof of ...
1 vote
1 answer
86 views

Expected revenue maximizing auction & ex-post efficiency

Is it true that in the design of the expected revenue maximizing auction in the standard independent private value setting, the allocation of the object may be ex-post inefficient?
1 vote
0 answers
55 views

Why does antitrust matter if we can just use auctions to get truthful reporting of marginal costs?

Why does antitrust matter if we can just use auctions to get truthful reporting of marginal costs? Like, if I want to get an oligopoly market to truthfully price items at socially optimal marginal ...
1 vote
0 answers
45 views

Why is there no subgame perfect equilibrium in a sequential two-player first-price auction?

Consider a two-player first-price auction with complete information, in which players' values $V_2\geq V_1$ for the prize are commonly known. If the players tie, the winner is determined randomly (...
2 votes
0 answers
36 views

All-pay auction

I am tasked with using the Revenue equivalence theorem to find the solution to the all-pay auction with $N$ players and $v_i \sim^{iid} U[0,1]$ values. I understand the solution can be found as $$ \...
1 vote
0 answers
32 views

Is there any research about mechanism design with more than two choice variables?

In traditional mechanism design problem, there are only two choice variables (regardless the payoff function of agent is quasilinear or not), which makes the strictly increasing difference of payoff ...
1 vote
1 answer
76 views

Equilibrium of Perturbed Dollar Auction Game - An Example from Game Theory: Analysis of Conflict by Roger Myerson

I am studying game theory using Myerson's textbook (Chapter 3 - Equilibria of Strategic-Form Games, Section 3.6 - The Decision-Analytic Approach to Games). I have difficulties understanding and ...
0 votes
1 answer
35 views

Define "Equilibrium" in Market Design task

in a current market design problem set I am very confused by the given questions. We are often asked to find "an equilibirum of the [auction type, e.g. second-price auction]". The amount of ...
0 votes
1 answer
84 views

Auction with independent private values - An example from Game Theory: Analysis of Conflict by Roger Myerson

I have difficulties understanding the equilibrium analysis of the following auction game: Suppose that there are $n$ bidders in an auction for a single indivisible object. Each player knows privately ...
5 votes
1 answer
78 views

Third price auction from Auction Theory by Krishna, Order statistics

Notation: $Y_1$: Highest order statistics of $(N-1)$ players' valuation. $F_n^M:$ The distribution function of the highest $n$th order statistics of $M$ players. $f_n^M:$ The density of the highest $n$...
0 votes
1 answer
118 views

Why do all filled bids receive the same rate, which is the rate of the lowest filled bid, during the US Treasury auction process?

This question pertains to the US Treasury auction process. {1} states: Treasury auctions are designed to minimize the cost of financing the national debt by promoting broad, competitive bidding and ...
2 votes
1 answer
108 views

The mathematical denotion of why each bidder bids the expected 2nd highest bidder's value in first-price auctions

Advanced Microeconomics by Jehle and Reny (p431) contains the following theorem: And also these comments: Because FN-1(·) is the distribution function of the highest value among a bidder’s N - 1 ...
2 votes
0 answers
21 views

Geometric interpretation of transfer function in incentive-compatible direct mechanism

Consider a set of players $i = 1,...,N$ who need to allocate some good. Each player $i$ valuates the good $v_i \in [0,1]$, with $v_i \sim f_i$. An individually rational direct mechanism $(p,c)$, with $...
1 vote
1 answer
103 views

Revenue-maximizing auction with no free disposal

Myerson has a famous theory that can be used to design truthful auctions maximizing the revenue of the seller. The simplest case is when a seller sells a single item to buyers whose values are ...
0 votes
1 answer
39 views

How widely can the objective of mechanism design be generalized?

The mechanism design lectures I've been watching have focused on the objective of maintaining performance guarantees in terms of either total surplus or total revenue/virtual surplus (while also ...
1 vote
1 answer
151 views

Understanding How to Counter the Winner's Curse

In both popular level books on economics/rationality/etc., and videos of actual economics lectures, I keep running into the suggestion to bid in a common value auction as though victory is already ...
2 votes
1 answer
53 views

Interpretation of the Myerson (1981) Bidder Utility (Optimal Auctions, Mechanism Design)

In Myerson 1981, the bidders' utility function does not make sense. $p_{i}$ is a probability of winning the auction, $t_i$ is the bidder's type (or valuation of the item), and $x_i$ is the payment. $r$...
4 votes
1 answer
150 views

A Gamma-Weibull distribution for empirical auction model

I am reading Comparing Open and Sealed Bid Auctions: Evidence From Timber Auctions (working paper version) and struggling with getting a log likelihood function about a Gamma-Weibull distribution. In ...
2 votes
0 answers
62 views

Is there any known algorithm to negotiate a price between co-owners who want to sell an item? [closed]

I am looking for an algorithm or a mechanism that I could implement for a specific case in my smart contract. How can multiple co-owners of an item agree efficiently on a selling price? I am not ...
1 vote
1 answer
165 views

How the fed influences treasury rates through open market operations

Lower yields through open market operations When the fed wants to put downward pressure on treasury rates, one tool it can use is open market purchases of the tenor it wants to push yields down on. ...
1 vote
0 answers
176 views

All-pay auction question

Two players take part in the following auction for a £1000 prize. The two players submit bids simultaneously, and the higher bid wins the prize (if bids are identical each gets £500). Both the winner ...
1 vote
1 answer
175 views

How does the punchline in this SMBC comic about "Vickrey-Clarke-Groves auctions" work?

Saturday Morning Breakfast Cereal (SMBC) showed this comic today: I'm not entirely sure I understand this punchline. Based on what Wikipedia tells me about this form of auction, it appears to be a ...
1 vote
0 answers
728 views

Hubzu.com bidding terminology - "value-based foreclosure auction" [closed]

The hubzu website often has properties for bidding that state "this is a value-based foreclosure auction, which means the beneficiary has provided a bid based on market value". However, it ...
2 votes
0 answers
39 views

Public/private knowledge in auctions

Consider three firms that engage in a first-price auction. Firm $i$'s payoff when firm $j$ wins the auction is $S_{i,j}$, which is deterministic and publicly known. The winning firm $i$ has to pay ...
3 votes
1 answer
335 views

Single-item single-bidder: why posted price is the only possible DSIC mechanism?

I'm reading Tim Roughgarden's Twenty Lectures on Algorithmic Game Theory. Lecture 5 is on revenue-maximizing auctions. It claims that in the single-parameter qusilinear environment, for the extremely ...
1 vote
0 answers
31 views

Price achievable in sealed-bid pay-as-bid energy auctions

Situation I am modeling an auction-based electricity market. Lets assume they call an auction for 500MWh, and participants can submit bids of at least 1MWh for a given price of $x$ EUR/MWh. Each ...
3 votes
2 answers
264 views

Second Price Auction - adjusting PDF for reservation price

The situation: There is a second price auction with 2 players. Their valuations of the object at auction are independently and identically distributed with pdf $f$ and cdf $F$ over $[0,\hat v]$. ...
1 vote
1 answer
581 views

First-price symmetric auction with discrete value

I've been trying to work the following problem out but I can't quite seem to understand it, or the whole concept of first-place auctions. I don't understand how we get to the equilibrium. The problem ...
6 votes
1 answer
114 views

First-order condition with arbitrary function

I am trying to use an auction model to simulate bids in a uniform price carbon emissions auction. That means it would be an auction with multiple bidders and one seller selling multiple units, or ...
4 votes
2 answers
472 views

Virtual valuation when the distribution is discrete

The virtual valuation of a buyer in an auctin is a function used to calculate the expeced revenue of a seller from that buyer. When the buyer's value comes from a continuous distribution with pdf $f$ ...
1 vote
1 answer
731 views

What is the expected payoff for a bidder in a second-price auction with N uniform distributed bidders, when the auctioneer sets a reserve price?

I would like to know what bidder i's expected payoff looks like in a second-price auction with $N=\{1,2,...,n\}$ bidders, where each bidder $i\in N$ has independent and uniform distributed valuations $...
4 votes
1 answer
1k views

Is it a weakly dominant strategy to bid your true value in a third-price auction with two identical goods and N uniform distributed bidders?

I am interest in finding the optimal strategy for a single bidder (the BNE), when I have a third-price auction with N bidders and two identical goods. The bidders have iid valuations: U(0,1) I have ...
0 votes
0 answers
26 views

Are there any economic reasons why luxury goods should not be auctioned off, or at least dynamically priced, when facing shortages?

Over the last year many prominent examples come to mind, where there does not seem to be any limiting moral or ethical reasons, and are simply not available most of the time due to demand greatly ...
1 vote
0 answers
22 views

Auction mechanism with quoters and price takers

Consider a market with one buyer with a fixed demand and multiple sellers for a divisible good. The goal of the market is to determine a uniform unit-price for the good as well as which seller ...
3 votes
1 answer
75 views

What would be the Dual Expected Utility function for an English Auction?

So the DEU function is $$V(p)= \Sigma \,x_i\pi_i(p),$$ and since an auction only has two outcomes for a bidder, failure (with probability $p$) or success (probability $1-p$) the function becomes $$V(p)...
7 votes
4 answers
411 views

Multi-item Auctions in Mechanism Design

I'm new to auction theory and only started reading it a few days ago. My question is this: Is it possible to design efficient auctions of multiple non-identical items? By efficient I mean maximize the ...
2 votes
1 answer
621 views

Uniform price vs. pay-as-bid auctions in energy markets

These two types of auctions are most commonly used in the energy trading markets. What would be advantages and disadvantages of each? And in the end, can we expect them to deliver similar outcome? One,...
-1 votes
1 answer
279 views

Two Sellers, One Buyer Auction

Consider the following game. There are two sellers, each of whom can produce one unit of an indivisible good. The cost of producing the unit for seller i is $c_i$ . There is a single buyer who wishes ...
2 votes
2 answers
662 views

Auctions and finding nash equilibrium of a dynamic game

Suppose we have a sequential version of an Auction game: • Player 1 places a bid. • Player 2 observes player 1’s bid, then places a bid. • The player with the highest bid wins the item at auction. • ...
4 votes
2 answers
97 views

Auction Theory: Proving that the found equilibrium is indeed optimal

I have been looking at auction theory and in the book Auction Theory by Krishna, there is one (seemingly simple) inequality that I just cannot follow. Context: given a private valuation $x$, the ...
0 votes
2 answers
96 views

Whats the name of the famous hostile takeover where the winner payed less than the loser

In my studies I learned about a bid war ending in a hostile takeover where the winner ended up paying less than the loser offered. It is a very nice demonstration of elements of game theory so I would ...
5 votes
0 answers
144 views

How to find an optimal strategy in an auction?

I have asked this question in mathematics forum as well but since I have not recieved an appropriate answer yet, I ask it here as well. Consider an auction of sculptures by four artists: A, B, C and D....
4 votes
1 answer
706 views

Are spectrum auctions a tax?

According to Wikipedia, A spectrum auction is a process whereby a government uses an auction system to sell the rights to transmit signals over specific bands of the electromagnetic spectrum and to ...
7 votes
1 answer
205 views

Differential equation for first-price auction

I want to solve a differential equation of the first-price auction. In particular, from Jonathan Levin's October 2004 lecture notes, we have the following differential equation: $$b'(s) = (s-b(s))(n-1)...
2 votes
0 answers
32 views

Economics behind reverse auctions with occasional non-profiting suppliers

I was curious about the theory behind a reverse auction system where some suppliers act in a non-profit manner, namely, that their consideration of extra-auctions benefits of providing their service ...
2 votes
0 answers
123 views

Market clearing price and dual variables in auctions

Suppose the allocation of an auction (or a market) is defined by the solution of a linear program. Then it is known that the associated clearing price is given by the dual variable associated to the ...