Author: Paul Pezanis-Christou
Publisher:
ISBN:
Category : Auctions
Languages : en
Pages : 44

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Author: Roberto Burguet
Publisher:
ISBN:
Category : Auctions
Languages : en
Pages : 21

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Author: Tibor Neugebauer
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ISBN:
Category :
Languages : en
Pages :

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Author: Thomas D. Jeitschko
Publisher:
ISBN:
Category :
Languages : en
Pages : 0

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In many sequential auctions the total number of units to be auctioned is not known at the outset of the auction. However, information regarding the number of units may become available in the course of the auction. The paper examines how such information impacts the formation of prices during the sequence of sales.

Author: Gagan Pratap Ghosh
Publisher:
ISBN:
Category :
Languages : en
Pages : 64

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This paper studies sequential auctions in the presence of Knightian uncertainty about the distribution of values. We propose equilibrium notions based on the multiple selves approach to deal with the possible time inconsistency that arises with dynamic bidding for max-min bidders. We characterize the unique symmetric equilibrium and show that it is robust to different specifications of preferences. We demonstrate that equilibrium prices are a supermartingale under dynamic consistency, providing an explanation for the well-documented puzzle ``declining price anomaly'' in sequential auctions. The model delivers rich testable implications: on the practical side, declining prices imply that bidders' worst-case belief first-order stochastically dominates the true distribution of values; on the theoretical side, dynamic inconsistency, which can arise when bidders have multiple priors, generates history dependence in bidding strategies.

Author: Richard Engelbrecht-Wiggans
Publisher:
ISBN:
Category : Auctions
Languages : en
Pages : 32

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Author: Antonio Rosato
Publisher:
ISBN:
Category :
Languages : en
Pages : 250

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This dissertation consists of three chapters exploring the role that reference-dependent preferences and loss aversion play in auctions and negotiations. The first chapter characterizes the profit-maximizing pricing and product-availability strategies for a retailer selling two substitute goods to loss-averse consumers, showing that limited-availability sales can manipulate consumers into an ex-ante unfavorable purchase. When the products have similar social value, the seller maximizes profits by raising the consumers' reference point through a tempting discount on a good available only in limited supply (the bargain) and cashing in with a high price on the other good (the rip-off), which the consumers buy if the bargain is not available to minimize their disappointment. The price difference between the bargain and the rip-off is larger when the products are close substitutes than when they are distant substitutes; hence dispersion in prices and dispersion in consumers' valuations are inversely related. The seller might prefer to offer a deal on the more valuable product, using it as a bait, because consumers feel a larger loss, in terms of forgone consumption, if this item is not available and are hence willing to pay a larger premium to reduce the uncertainty in their consumption outcomes. I also show that the bargain item can be a loss leader, that the seller's product line is not welfare-maximizing and that she might supply a socially wasteful product. The second chapter studies sequential first-price and second-price auctions when bidders are expectations-based loss-averse. A large body of empirical research in auctions documents that prices of identical products sold sequentially tend to decline across auctions (a phenomenon which has been dubbed "declining price anomaly" or "afternoon effect", as often later auctions take place in the afternoon whereas the first ones usually take place in the morning) . In this chapter I argue that expectations-based reference-dependent preferences and loss aversion provide an alternative, preference-based, explanation for the afternoon effect observed in sequential auctions. First, I show that when bidders have reference-dependent preferences, the equilibrium bidding functions are history-dependent, even if bidders have independent private values. The reason is that learning the type of the winner in the previous auction modifies a bidder's expectations about how likely he is to win in the current auction; and since expectations are the reference point, the optimal bid in each round is affected by this learning effect. More precisely, I identify what I call a "discouragement effect": the higher the type of the winner in the first auction is, the less aggressively the bidding behavior of the remaining bidders in the second auction. This discouragement effect in turn pushes bidders to bid more aggressively in the earlier auction. Moreover, the uncertainty about future own bids, due to the history-dependence of the equilibrium strategies, generates a precautionary bidding effect that pushes bidders to bid less aggressively in the first auction. The precautionary bidding effect and the anticipation of the discouragement effect go in opposite directions; when the latter effect is stronger, a declining price path arises in equilibrium. The third chapter studies the role of expectations-based reference-dependent preferences and loss aversion in a sequential bargaining game with one-sided incomplete information between a seller who makes all the offers and a buyer. I show that loss aversion eases the rent-efficiency trade-off for the seller who can now serve a larger measuer of consumers at an earlier stage. Thus, in equilibrium the seller achieves higher profits and we have less delay with loss aversion than without it. Furthermore, I also show that, besides increasing the seller's profit and overall trade efficiency, loss aversion also reallocates surplus among consumers by increasing the equilibrium payoff of some low-valuation buyers and decreasing that of high-valuation ones.

Author: Kevin Norman Goulding
Publisher:
ISBN:
Category : Electric utilities
Languages : en
Pages : 196

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This paper investigates the process by which bidders in the NYISO (New York Independent System Operator) market update their bids between the Day-ahead and Hour-ahead markets. Observed bids for the ten largest bidders over the years 2002- 2010 are used to investigate the extent to which observed bids into both the Day-ahead (DA) and Hour-ahead (HA) markets are consistent with joint profit maximization in the two markets. Theory about single period bidding behavior developed in the California spot electricity market (Wolak, 2003) and Texas electricity balancing market (Hortacsu and Puller, 2008) is extended to the two-period case specific to the NYISO market. While uncertainty comes from both the behavior of competing firms and additive uncertainty in demand, bidder behavior is broadly consistent with expected profit maximization against a stochastic piece of demand that is additively separable.

Author: Juan Feng
Publisher:
ISBN:
Category :
Languages : en
Pages : 0

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Under what circumstances will a seller be better of selling his inventory sequentially, rather than selling them all in a single auction? If buyers come sequentially, there is an obvious reason to sell items sequentially. However, we show that even (1) when all buyers are present at the beginning of the auction, (2) when both the seller and buyers are impatient, a sequential sale can still be more profitable for the seller as it stimulates competition among forward-looking bidders. This result depends on: (1) the "intensity of competition", which is characterized by the number of items available relative to the number of buyers; and (2) the discount factor of the auctioneer and bidders; and (3) the uncertainty among bidders about how many items available for sale. The result is then extended to a T-period setting. When bidders are strategic players who can predict the optimal strategy of the seller, we find that the dynamic equilibrium structure of this game is quite different from that in a typical optimal stopping problem.

Author: Edward J. Anderson
Publisher:
ISBN:
Category :
Languages : en
Pages : 0

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We study multi-unit auctions where bidders have single-unit demand and asymmetric information. For symmetric equilibria, we identify circumstances where uniform-pricing is better for the auctioneer than pay-as-bid pricing, and where transparency improves the revenue of the auctioneer. An issue with the uniform-price auction is that seemingly collusive equilibria can exist. We show that such outcomes are less likely if the traded volume of the auctioneer is uncertain. But if bidders are asymmetric ex-ante, then both a price áoor and a price cap are normally needed to get a unique equilibrium, which is well behaved.