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Reputation in multi-unit ascending auction with common values

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.
0165-1765
216-218
Kwiek, Maksymilian
84ba7dab-b54b-4d22-8cf3-817b2a2077cf
Kwiek, Maksymilian
84ba7dab-b54b-4d22-8cf3-817b2a2077cf

Kwiek, Maksymilian (2013) Reputation in multi-unit ascending auction with common values. Economics Letters, 118 (1), 216-218. (doi:10.1016/j.econlet.2012.10.007).

Record type: Article

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.

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Published date: January 2013
Organisations: Economics

Identifiers

Local EPrints ID: 358429
URI: https://eprints.soton.ac.uk/id/eprint/358429
ISSN: 0165-1765
PURE UUID: 8c823d07-48a5-4867-953e-c7c7b395a2f9

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Date deposited: 10 Oct 2013 13:34
Last modified: 19 Jul 2019 21:25

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