The private value single item bisection auction

Elena Grigorieva; P.J.J. Herings; Rudolf Mueller; Dries Vermeulen

doi:10.1007/s00199-005-0032-z

The private value single item bisection auction

Elena Grigorieva^*, P.J.J. Herings, Rudolf Mueller, Dries Vermeulen

^*Corresponding author for this work

Research output: Contribution to journal › Article › Scientific › peer-review

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Abstract

In this paper we present a new iterative auction, the bisection auction, that can be used for the sale of a single indivisible object. The bisection auction has fewer rounds than the classical English auction and causes less information to be revealed than the Vickrey auction. Still, it preserves all characteristics the English auction shares with the Vickrey auction: there exists an equilibrium in weakly dominant strategies in which everyone behaves truthfully, the object is allocated in accordance with efficiency requirements to the buyer who has the highest valuation, and the price paid by the winner of the object equals the second-highest valuation

Original language	English
Pages (from-to)	107-118
Number of pages	12
Journal	Economic Theory
Volume	30
Issue number	1
DOIs	https://doi.org/10.1007/s00199-005-0032-z
Publication status	Published - Jan 2007
Externally published	Yes

Keywords

single item auction
weakly dominant strategy
extensive form games of incomplete information
information revelation
binary search

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AB - In this paper we present a new iterative auction, the bisection auction, that can be used for the sale of a single indivisible object. The bisection auction has fewer rounds than the classical English auction and causes less information to be revealed than the Vickrey auction. Still, it preserves all characteristics the English auction shares with the Vickrey auction: there exists an equilibrium in weakly dominant strategies in which everyone behaves truthfully, the object is allocated in accordance with efficiency requirements to the buyer who has the highest valuation, and the price paid by the winner of the object equals the second-highest valuation

KW - single item auction

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KW - extensive form games of incomplete information

KW - information revelation

KW - binary search

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The private value single item bisection auction

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Keywords

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