This paper investigates joint bidding when firms have incentives to sign subcontracts with each other after competing in the stage. A consortium affects horizontal subcontracting market and, through backward induction, alters firms’ bids. Our findings challenge current legal practice that consortia without efficiencies must pass “no-solo-bidding test”, requiring its members could not bid stand-...

An auction is externality-robust if unilateral deviations from equilibrium leave the other bidders’ payoffs unaffected. The equilibrium and its outcome will then persist if certain types of externalities arise between bidders. One example are externalities due to spiteful preferences, which have been used to explain overbidding in the second-price auction (SPA). Another example are cross-shareh...

The sequential auction problem is commonplace in open, electronic marketplaces such as eBay. This problem occurs when a buyer faces a complex strategic problem in bidding across multiple auctions, each selling similar or essentially identical items and when the buyer would have a simple, truth-revealing strategy if there was but a single auction event. Our model allows for multiple, distinct go...

We introduce endogenous fees for participating in second-price auction which we use for a two-stage mechanism to solve King Solomon’s dilemma. They are positive for all agents. They are nonetheless shown to maintain the agents’ incentives for truthful bidding and guarantee participation by the highest-value agent. This feature of the endogenous fees is powerful enough for the efficient outcome ...

It is shown that the linkage principle (Milgrom and Weber (1982)) does not extend to the multi-unit auction setting. An analysis of the equilibium bidding strategies is carried out for the general two-agent/two-unit Vickrey auction in order to provide economic insight into the nature of the failure. In addition, an explicit counterexample is provided. ∗ Both authors acknowledge support from the...

We have designed configurable agents to represent users in online auctions, specificMly the Michigan AuctionBot. The agents can be configured, started, and monitored from a web interface. We implemented three types of agents, distinguished by their different ways of using information in the auctions. A competitive agent does not use any information in the auction market. It chooses its actions ...