Multi-unit auctions with uniform prices

Engelbrecht‐Wiggans, Richard; Kahn, Charles M.

doi:10.1007/s001990050220

Cited by 198 publications

(104 citation statements)

References 7 publications

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“…The threshold value, and their non-negative bids for the second unit, is a function of the distribution of the kth and k-1th highest values. This new equilibrium characterization complements the analysis in Noussair (1995) and Engelbrecht-Wiggans and Kahn (1998).…”

Section: Resultsmentioning

confidence: 58%

“…It corrects and complements Noussair (1995) and Engelbrecht-Wiggans and Kahn (1998), which were published nearly two decades ago, at time where multiple-object auctions began to be used to solve complex allocation problems such as the sale of the spectrum of frequency for mobile telephony (Cramton et al (2006), Milgrom (2004)) and the privatization of government-owned companies through the sale of shares (Menezes (1995)). …”

Section: Introductionmentioning

confidence: 98%

“…We identify the errors in the analysis of Noussair (1995) and Engelbrecht-Wiggans and Kahn (1998), and provide a characterization of equilibrium behavior which involves a threshold value that separates bidders who bid zero for the second unit from those who shade their bids for the second unit.…”

Section: Introductionmentioning

confidence: 99%

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A new characterization of equilibrium in multiple-object uniform-price auctions

Khezr

Menezes

2017

Economics Letters

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Section: Resultsmentioning

confidence: 58%

Section: Introductionmentioning

confidence: 98%

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A new characterization of equilibrium in multiple-object uniform-price auctions

Khezr

Menezes

2017

Economics Letters

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“…1 Before the 2001 Austrian UMTS auction, for example, the largest incumbent, Telekom Austria, announced it "... would be satis…ed with just two out of the twelve blocks for o¤er and if the […ve] other bidders behaved similarly, it should be possible to get the frequencies on sensible terms ... but that it would bid on a third block if one of its rivals did..."Other bidders understood the hint and bidding stopped after a couple of rounds at low prices with each bidder obtaining just two blocks (Klemperer 2004, p. 136). Several papers have demonstrated that this type of demand reduction can be supported in an equilibrium of the sealed-bid uniform-price auctions, see, e.g., Noussair (1995), Engelbrecht-Wiggans and Kahn (1998), and Ausubel and Cramton (1998). As Ausubel and Cramton (1998) note, such a result can usually be adapted to apply for the open ascending auction.…”

Section: Introductionmentioning

confidence: 99%

Demand reduction and preemptive bidding in multi-unit license auctions

2012

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Multi-unit ascending auctions allow for equilibria in which bidders strategically reduce their demand and split the market at low prices. At the same time, they allow for preemptive bidding by incumbent bidders in a coordinated attempt to exclude entrants from the market. We consider an environment where both demand reduction and preemptive bidding are supported as equilibrium phenomena of the ascending auction. In a series of experiments, we compare its performance to that of the discriminatory auction. Strategic demand reduction is quite prevalent in the ascending auction even when entry imposes a (large) negative externality on incumbents. As a result, the ascending auction performs worse than the discriminatory auction both in terms of revenue and efficiency, while entrants' chances are similar across the two formats. Abstract Multi-unit ascending auctions allow for equilibria in which bidders strategically reduce their demand and split the market at low prices. At the same time, they allow for preemptive bidding by incumbent bidders in a coordinated attempt to exclude entrants from the market. We consider an environment where both demand reduction and preemptive bidding are supported as equilibrium phenomena of the ascending auction. In a series of experiments, we compare its performance to that of the discriminatory auction. Strategic demand reduction is quite prevalent in the ascending auction even when entry imposes a (large) negative externality on incumbents. As a result, the ascending auction performs worse than the discriminatory auction both in terms of revenue and e¢ ciency, while entrants'chances are similar across the two formats.JEL classi…cation: D44, D45, C91

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“…Considerable progress in theoretical modeling has been made for cases where all the goods sold are identical and the value of obtaining extra units does not increase as one obtains more (3)(4)(5). Auctions for government debt, produce, hotel rooms, or airplane tickets often have this property.…”

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confidence: 99%

Innovations in the design of bundled-item auctions

Noussair¹

2003

Proc. Natl. Acad. Sci. U.S.A.

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A uctions have captured the attention of economists for several reasons. One is the relevance for specific applications of research on auctions in light of their widespread and growing use in the field, particularly in online transactions. Auctions are also highly amenable to economic analysis, because the rules are generally precisely defined; modern game-theoretic techniques of economic analysis can be brought to bear with fewer simplifying assumptions than for many other areas of economics. Furthermore, the rich variety of possible auction rules and underlying environments in which auctions can be conducted provide a wealth of interesting economic issues to investigate. The study of auctions, which began with the seminal work of Vickrey (1), has yielded useful policy prescriptions with regard to the sale of goods. The work that Porter et al. (2) report and summarize in this issue of PNAS is representative of a particularly interesting and useful branch of this research, the development of combinatorial auctions.The Porter et al. (2) study employs the research methodology of experimental economics. Although introduced later than in the natural sciences and psychology, experimental methods in economics have gained broad acceptance in recent decades. As in the natural sciences, an experiment involves constructing a laboratory environment specifically for the purpose of addressing research questions. Human subjects are placed in a laboratory economy, and their decisions and the resulting outcomes are studied. The investigator is able to observe variables with values that are unknown in typical economic situations, to control parameters of interest, and to replicate the experiment repeatedly under identical conditions. One of the most innovative uses of the methodology has been to design and test new auction rules for use in specific applications.The performance of an auction system is typically evaluated on two criteria: efficiency and revenue.

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Multi-unit auctions with uniform prices

Cited by 198 publications

References 7 publications

A new characterization of equilibrium in multiple-object uniform-price auctions

A new characterization of equilibrium in multiple-object uniform-price auctions

Demand reduction and preemptive bidding in multi-unit license auctions

Innovations in the design of bundled-item auctions

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