How to Sell in a Sequential Auction Market (joint with Ken Hendricks of the University of Wisconsin-Madison)
A seller with one unit of a good faces N >= 3 buyers and a single competitor. Buyers who do not get the good from the seller will compete in a second-price auction for one other identical unit. We characterize the optimal mechanism for the seller in this setting and show that it cannot be implemented by a standard auction. Instead, it can be implemented by a modified third-price or first-price auction with transfers between the seller and the two highest bidders. The optimal mechanism features allocation to the buyer with the second-highest valuation and a withholding rule that depends on the second- and third-highest valuations. We show that this withholding rule raises significantly more revenue than would a standard reserve price. We also consider the novel implications of sequential cross-mechanism spillovers for competition between sellers.
Please sign up for meetings here: docs.google.com/spreadsheets/d/1UnW-JOf7vD54h9QKWYWXQS1Wc-H4oP7nbywDdeJvr4o/edit#gid=0
Link to paper: www.ssc.wisc.edu/~hendrick/working%20papers/Sequential_Mechanism_Sep2019.pdf
Date:
18 October 2019, 14:15 (Friday, 1st week, Michaelmas 2019)
Venue:
Manor Road Building, Manor Road OX1 3UQ
Venue Details:
Seminar Room A
Speaker:
Tom Wiseman (University of Texas at Austin)
Organising department:
Department of Economics
Part of:
Nuffield Economic Theory Seminar
Booking required?:
Not required
Audience:
Members of the University only
Editor:
Melis Clark
