Second best efficiency and the English auction
نویسندگان
چکیده
We characterize the incentive compatible allocation that maximizes the expected social surplus in a single-unit sale when the efficient allocation is not implementable. We then show that allowing for the possibility that the good remains unsold may increase the expected social surplus even when allocating the good to no bidder generates less social surplus than allocating to any of the bidders. Aside from this option, the English auction implements the second best allocation when there are only two bidders but not always with more than two bidders. JEL Classification Numbers: D44, D82.
منابع مشابه
An experimental analysis of auctions with interdependent valuations
We study experiments in an auction setting with interdependent valuation. Groups of three players receive private signals and then bid for a single, indivisible item. Valuations for the item differ within groups and depend asymmetrically on a bidder’s own and other bidders’ signals. Theoretically, the English auction yields efficient allocations, while other standard auction formats fail to do ...
متن کاملInefficient rushes in auctions
We analyze a setting common in privatizations, public tenders, and takeovers in which the ex post efficient allocation, i.e., the first best, is not implementable. Our first main result is that the open ascending auction is not second best because it is prone to rushes, i.e., all active bidders quitting simultaneously, that undermine its efficiency. Our second main result is that the second bes...
متن کاملUsing Auction Theory to Inform Takeover Regulation
1. Introduction This paper focuses on certain mechanisms that govern the sale of corporate assets. Under Delaware law, when a potential acquirer makes a serious bid for a target, the target's Board of Directors is required to act as would " auctioneers charged with getting the best price for the stockholders at a sale of the company.'' 1 The Delaware courts' preference for auctions follows from...
متن کاملInefficient Equilibria of Second-Price/English Auctions with Resale
In second-price or English auctions involving symmetric, independent, private-value bidders the equilibrium outcome may not be efficient if resale is allowed. In addition to the efficient, symmetric equilibrium there exist inefficient, asymmetric equilibria in which the bidder who wins the item offers it for resale to the losers. For the case where the reserve price in the initial auction equal...
متن کاملA Practical English Auction with Simple Revocation∗
An English auction is the most familiar type of auctions. Generally, an electronic auction has mainly two entities, the registration manager (RM) who treats the registration of bidders, and the auction manager (AM) who holds auctions. Before starting an auction, a bidder who wants to participate in English auction is registered to RM with her/his information. An electronic English auction proto...
متن کاملذخیره در منابع من
با ذخیره ی این منبع در منابع من، دسترسی به آن را برای استفاده های بعدی آسان تر کنید
عنوان ژورنال:
- Games and Economic Behavior
دوره 73 شماره
صفحات -
تاریخ انتشار 2011