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165
Auction Theory: A Guide to the Literature
 JOURNAL OF ECONOMIC SURVEYS
, 1999
"... This paper provides an elementary, nontechnical, survey of auction theory, by introducing and describing some of the critical papers in the subject. (The most important of these are reproduced in a companion book, The Economic Theory of Auctions, Paul Klemperer (ed.), Edward Elgar (pub.), forthco ..."
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Cited by 528 (4 self)
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This paper provides an elementary, nontechnical, survey of auction theory, by introducing and describing some of the critical papers in the subject. (The most important of these are reproduced in a companion book, The Economic Theory of Auctions, Paul Klemperer (ed.), Edward Elgar (pub.), forthcoming.) We begin with the most fundamental concepts, and then introduce the basic analysis of optimal auctions, the revenue equivalence theorem, and marginal revenues. Subsequent sections address riskaversion, affiliation, asymmetries, entry, collusion, multiunit auctions, double auctions, royalties, incentive contracts, and other topics. Appendices contain technical details, some simple worked examples, and a bibliography for each section.
Efficient Design with Interdependent Valuations

, 1996
"... We study efficient, BayesNash incentive compatible mechanisms in a social choice setting that allows for informational and allocative externalities. We show that such mechanisms exist only if a congruence condition relating private and social rates of information substitution is satisfied. If signa ..."
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Cited by 125 (5 self)
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We study efficient, BayesNash incentive compatible mechanisms in a social choice setting that allows for informational and allocative externalities. We show that such mechanisms exist only if a congruence condition relating private and social rates of information substitution is satisfied. If signals are multidimensional, the congruence condition is determined by an integrability constraint, and it can hold only in nongeneric cases such as the private value case or the symmetric case. If signals are onedimensional, the congruence condition reduces to a monotonicity constraint and it can be generically satisfied. We apply the results to the study of multiobject auctions, and we discuss why such auctions cannot be reduced to onedimensional models without loss of generality.
Robust mechanism design
 ECONOMETRICA
, 2005
"... The mechanism design literature assumes too much common knowledge of the environment among the players and planner. We relax this assumption by studying implementation on richer type spaces, with more higher order uncertainty. We study the "ex post equivalence" question: when is interim im ..."
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Cited by 111 (9 self)
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The mechanism design literature assumes too much common knowledge of the environment among the players and planner. We relax this assumption by studying implementation on richer type spaces, with more higher order uncertainty. We study the "ex post equivalence" question: when is interim implementation on all possible type spaces equivalent to requiring ex post implementation on the space of payoff types? We show that ex post equivalence holds when the social choice correspondence is a function and in simple quasilinear environments. When ex post equivalence holds, we identify how large the type space must be to obtain the equivalence. We also show that ex post equivalence fails in general, including in quasilinear environments with budget balance. For quasilinear environments, we provide an exact characterization of when interim implementation is possible in rich type spaces. In this environment, the planner can fully extract players’ belief types, so the incentive constraints reduce to conditions distinguishing types with the same beliefs about others’ types but different payoff types.
Eliciting Informative Feedback: The PeerPrediction Method
 Management Science
, 2005
"... informs ® doi 10.1287/mnsc.1050.0379 ..."
Mechanism Design with Interdependent Valuations
 E¢ ciency,” Econometrica
, 2004
"... Agents ’ valuations are interdependent if they depend on the signals, or types, of all agents. Under the implicit assumption that agents cannot observe their outcomedecision payoffs, previous literature has shown that with interdependent valuations and independent signals efficient design is imposs ..."
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Cited by 63 (6 self)
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Agents ’ valuations are interdependent if they depend on the signals, or types, of all agents. Under the implicit assumption that agents cannot observe their outcomedecision payoffs, previous literature has shown that with interdependent valuations and independent signals efficient design is impossible. This paper shows that an efficient mechanism exists in an environment where first the final outcome (e.g., allocation of the goods) is determined, then the agents observe their own outcomedecision payoffs, and then final transfers are made.
Strategic Jump Bidding in English Auctions
 Review of Economic Studies
, 1998
"... This paper solves for equilibria of sequential bid (or English) auctions with affiliated values when jump bidding strategies may be employed to intimidate one’s opponents. In these equilibria, jump bids serve as correlating devices which select asymmetric bidding functions to be played subsequentl ..."
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Cited by 53 (0 self)
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This paper solves for equilibria of sequential bid (or English) auctions with affiliated values when jump bidding strategies may be employed to intimidate one’s opponents. In these equilibria, jump bids serve as correlating devices which select asymmetric bidding functions to be played subsequently. Each possibility of jump bidding provides a Pareto improvement for the bidders from the symmetric equilibrium of a sealed bid, secondprice auction. The expanded set of equilibria can approximate either first or secondprice outcomes and produce exactly the set of expected prices between those two bounds. These results contrast with standard conclusions that equate English and secondprice auctions. 1
Overcoming incentive constraints by linking decisions, Econometrica
 McKelvey, R.D., Palfrey, T.R
, 2007
"... Consider an arbitrary Bayesian decision problem in which the preferences of each agent are private information. We prove that the utility costs associated with incentive constraints typically decrease when the decision problem is linked with independent copies of itself. This is established by first ..."
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Cited by 50 (0 self)
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Consider an arbitrary Bayesian decision problem in which the preferences of each agent are private information. We prove that the utility costs associated with incentive constraints typically decrease when the decision problem is linked with independent copies of itself. This is established by first defining a mechanism in which agents must budget their representations of preferences so that the frequency of preferences across problems mirrors the underlying distribution of preferences, and then arguing that agents will satisfy their budget by being as truthful as possible. Examples illustrate the disappearance of incentive costs when problems are linked in a rich variety of problems, including public goods allocation, voting, and bargaining.
Approximating Optimal Auctions
, 2005
"... We study a fundamental problem in micro economics called optimal auction design: A seller wishes to sell an item to a group of selfinterested agents. Each agent i has a privately known value for winning the object. Given a joint distribution of these values, the goal is to construct an optimal auct ..."
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Cited by 47 (2 self)
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We study a fundamental problem in micro economics called optimal auction design: A seller wishes to sell an item to a group of selfinterested agents. Each agent i has a privately known value for winning the object. Given a joint distribution of these values, the goal is to construct an optimal auction, i.e. a truth revealing protocol that maximizes the seller’s expected revenue. We introduce a novel generic method for the construction of nearoptimal auctions that satisfy expost individual rationality. Our method guarantees an expected revenue of at least 1/2 of the optimum for any given distribution of the values of the agents. Moreover, we show that unless the agents ’ values are strongly dependent, the expected revenue of our auctions is almost optimal. Our auctions run in polynomial time. For general distributions of the agents’ values, we show that no deterministic polynomial time ascending auction can achieve an approximation ratio better than 7/8. The design of practical auctions may give rise to limitations on the designer of the auction which are not reflected in classic economic models. We study two such limitations and show tight bounds on the approximation ratio that can be obtained by any polynomialtime auction under each of these limitations.
Cartel Enforcement With Uncertainty About Costs
 International Economic Review
, 1990
"... this paper is to maximize producer surplus. If instead the cartel is formed and regulated by the government, then it seems likely that both producer and consumer surplus would be given positive weight in the objective function. An analysis of this problem would extend the work of Baron and Myerson ( ..."
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Cited by 47 (1 self)
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this paper is to maximize producer surplus. If instead the cartel is formed and regulated by the government, then it seems likely that both producer and consumer surplus would be given positive weight in the objective function. An analysis of this problem would extend the work of Baron and Myerson (1982) from one to several firms.