Endogenous Competition Alters the Structure of Optimal Auctions
Author | : Ron Harstad |
Publisher | : |
Total Pages | : 0 |
Release | : 2011 |
ISBN-10 | : OCLC:1376339590 |
ISBN-13 | : |
Rating | : 4/5 ( Downloads) |
Download or read book Endogenous Competition Alters the Structure of Optimal Auctions written by Ron Harstad and published by . This book was released on 2011 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Potential bidders respond to a seller's choice of auction mechanism for a common-value or affiliated-values asset by endogenous decisions whether to incur an information-acquisition cost (and observe a private estimate), or forgo competing. Privately informed participants decide whether to incur a bid-preparation cost and pay an entry fee, or cease competing. Auction rules and information flows are quite general; participation decisions may be simultaneous or sequential. The resulting revenue identity for any auction mechanism implies that optimal auctions are allocatively efficient; a nontrivial reserve price is revenue-inferior. Optimal auctions are otherwise contentless: any auction that sells without reserve becomes optimal by adjusting any one of the continuous, spanning parameters, e.g., the entry fee. Seller's surplus-extracting tools are now substitutes, not complements. Many econometric studies of auction markets are seen to be flawed in their identification of the number of bidders.