Reputation in multi-unit ascending auction with common values
Reputation in multi-unit ascending auction with common values
This paper considers a multi-unit ascending auction with two players and common values. A large set of equilibria in this model is not robust to a small reputational perturbation. In particular, if there is a positive probability that there is a type who always demands many units, regardless of price, then the model has a unique equilibrium payoff profile. If this uncertainty is only on one side, then the player who is known to be normal lowers her demand in order to stop the auction immediately at the reserve price. Hence, her possibly committed opponent buys all the units she demands at the lowest possible price. If the reputation is on both sides, then a War of Attrition emerges.
multi-unit auction, uniform price, ascending auction, reputation, aggressive bidding
1-21
University of Southampton
Kwiek, Maksymilian
84ba7dab-b54b-4d22-8cf3-817b2a2077cf
July 2010
Kwiek, Maksymilian
84ba7dab-b54b-4d22-8cf3-817b2a2077cf
Kwiek, Maksymilian
(2010)
Reputation in multi-unit ascending auction with common values
(Discussion Papers in Economics and Econometrics, 1012)
Southampton, GB.
University of Southampton
21pp.
Record type:
Monograph
(Discussion Paper)
Abstract
This paper considers a multi-unit ascending auction with two players and common values. A large set of equilibria in this model is not robust to a small reputational perturbation. In particular, if there is a positive probability that there is a type who always demands many units, regardless of price, then the model has a unique equilibrium payoff profile. If this uncertainty is only on one side, then the player who is known to be normal lowers her demand in order to stop the auction immediately at the reserve price. Hence, her possibly committed opponent buys all the units she demands at the lowest possible price. If the reputation is on both sides, then a War of Attrition emerges.
Text
1012_with_cover.pdf
- Accepted Manuscript
More information
Published date: July 2010
Keywords:
multi-unit auction, uniform price, ascending auction, reputation, aggressive bidding
Identifiers
Local EPrints ID: 161635
URI: http://eprints.soton.ac.uk/id/eprint/161635
ISSN: 0966-4246
PURE UUID: 3e9fb78f-6be3-4f54-a3e2-04ce47d696e6
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Date deposited: 03 Aug 2010 09:23
Last modified: 14 Mar 2024 02:00
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