Reputation in multi-unit ascending auction
Reputation in multi-unit ascending auction
This paper considers a model of multi-unit ascending auction with two players and known values. This standard model is not robust to a small reputational perturbation. If reputation is one-sided, then the player without reputation lowers her demand in order to clear the market and stop the auction immediately at the reserve price. Hence, the player with reputation buys all the units she demands at the lowest possible price. If the reputation is on both sides, then the War of Attrition emerges. In any case, there is a unique equilibrium payoff profile. One feature of the equilibrium of the two-sided model is that market clearing is delayed and the expected realized price is higher than the reserve price.
University of Southampton
Kwiek, Maksymilian
84ba7dab-b54b-4d22-8cf3-817b2a2077cf
2006
Kwiek, Maksymilian
84ba7dab-b54b-4d22-8cf3-817b2a2077cf
Kwiek, Maksymilian
(2006)
Reputation in multi-unit ascending auction
(Discussion Papers in Economics and Econometrics, 609)
Southampton.
University of Southampton
15pp.
Record type:
Monograph
(Discussion Paper)
Abstract
This paper considers a model of multi-unit ascending auction with two players and known values. This standard model is not robust to a small reputational perturbation. If reputation is one-sided, then the player without reputation lowers her demand in order to clear the market and stop the auction immediately at the reserve price. Hence, the player with reputation buys all the units she demands at the lowest possible price. If the reputation is on both sides, then the War of Attrition emerges. In any case, there is a unique equilibrium payoff profile. One feature of the equilibrium of the two-sided model is that market clearing is delayed and the expected realized price is higher than the reserve price.
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Published date: 2006
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Local EPrints ID: 39657
URI: http://eprints.soton.ac.uk/id/eprint/39657
PURE UUID: b86999ae-6db4-45fa-959b-6a42fd68d623
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Date deposited: 29 Jun 2006
Last modified: 15 Mar 2024 08:15
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