The private value single item bisection auction |
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| Authors: | Elena Grigorieva P. Jean-Jacques. Herings Rudolf Müller Dries Vermeulen |
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| Affiliation: | (1) Department of Quantitative Economics, Maastricht University, P.O. Box 616, 6200, MD, Maastricht, The Netherlands;(2) Department Economics, Maastricht University, P.O. Box 616, 6200, MD, Maastricht, The Netherlands |
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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 valuationElena Grigorieva acknowledges support by the Dutch Science Foundation NWO through grant 401-01-101. Jean-Jacques Herings acknowledges support by the Dutch Science Foundation NWO through a VICI-grant. Rudolf Müller acknowledges support by European Commission through funds for the International Institute of Infonomics |
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| Keywords: | Single item auction Weakly dominant strategy Extensive form games of incomplete information Information revelation Binary search |
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