3,229 research outputs found
Asymmetric-valued Spectrum Auction and Competition in Wireless Broadband Services
We study bidding and pricing competition between two spiteful mobile network
operators (MNOs) with considering their existing spectrum holdings. Given
asymmetric-valued spectrum blocks are auctioned off to them via a first-price
sealed-bid auction, we investigate the interactions between two spiteful MNOs
and users as a three-stage dynamic game and characterize the dynamic game's
equilibria. We show an asymmetric pricing structure and different market share
between two spiteful MNOs. Perhaps counter-intuitively, our results show that
the MNO who acquires the less-valued spectrum block always lowers his service
price despite providing double-speed LTE service to users. We also show that
the MNO who acquires the high-valued spectrum block, despite charing a higher
price, still achieves more market share than the other MNO. We further show
that the competition between two MNOs leads to some loss of their revenues. By
investigating a cross-over point at which the MNOs' profits are switched, it
serves as the benchmark of practical auction designs
All-Pay Auctions with Negative Prize Externalities: Theory and Experimental Evidence
The paper characterizes the mixed-strategy equilibria in all-pay auctions with endogenous prizes that depend positively on own eďŹort and negatively on the eďŹort of competitors. Such auctions arise naturally in the context of investment games, lobbying games, and promotion tournaments. We also provide an experimental analysis of a special case which captures the strategic situation of a two-stage game with investment preceding homogenous Bertrand competition. We obtain overinvestment both relative to the mixed-strategy equilibrium and the social optimum.All-pay auctions, oligopoly, investment, experiment, overbidding
License prices for financially constrained firms
It is often alleged that high auction prices inhibit service deployment. We investigate this claim under the extreme case of financially constrained bidders. If demand is just slightly elastic, auctions maximize consumer surplus if consumer surplus is a convex function of quantity (a common assumption), or if consumer surplus is concave and the proportion of expenditure spent on deployment is greater than one over the elasticity of demand. The latter condition appears to be true for most of the large telecom auctions in the US and Europe. Thus, even if high auction prices inhibit service deployment, auctions appear to be optimal from the consumersâ point of view
Allocative and Informational Externalities in Auctions and Related Mechanisms
We study the effects of allocative and informational externalities in (multi-object) auctions and related mechanisms. Such externalities naturally arise in models that embed auctions in larger economic contexts. In particular, they appear when there is downstream interaction among bidders after the auction has closed. The endogeneity of valuations is the main driving force behind many new, specific phenomena with allocative externalities: even in complete information settings, traditional auction formats need not be efficient, and they may give rise to multiple equilibria and strategic non-participation. But, in the absence of informational externalities, welfare maximization can be achieved by Vickrey-Clarke- Groves mechanisms. Welfare-maximizing Bayes-Nash implementation is, however, impossible in multi-object settings with informational externalities, unless the allocation problem is separable across objects (e.g. there are no allocative externalities nor complementarities) or signals are one-dimensional. Moreover, implementation of any choice function via ex-post equilibrium is generically impossible with informational externalities and multidimensional types. A theory of information constraints with multidimensional signals is rather complex, but indispensable for our study
License Prices for Financially Constrained Firms
It is often alleged that high auction prices inhibit service deployment. We investigate this claim under the extreme case of financially constrained bidders. If demand is just slightly elastic, auctions maximize consumer surplus if consumer surplus is a convex function of quantity (a common assumption), or if consumer surplus is concave and the proportion of expenditure spent on deployment is greater than one over the elasticity of demand. The latter condition appears to be true for most of the large telecom auctions in the US and Europe. Thus, even if high auction prices inhibit service deployment, auctions appear to be optimal from the consumers' point of view.
Understanding Overbidding in Second Price Auctions: An Experimental Study
This paper presents results from a series of second price private value auction (SPA) experiments in which bidders are either given for free, or are allowed to purchase, noisy signals about their opponents' value. Even though theoretically such information about opponents' value has no strategic use in the SPA, it provides us with a convenient instrument to change bidders' perception about the "strength" (i.e., the value) of their opponent. We argue that the empirical relationship between the incidence and magnitude of overbidding and bidders' perception of the strength of their opponent provides the key to understand whether overbidding in second price auctions are driven by "spite" motives or by the "joy of winning." The experimental data show that bidders are much more likely to overbid, though less likely to submit large overbid, when they perceive their rivals to have similar values as their own. We argue that this empirical relationship is more consistent with a modified "joy of winning" hypothesis than with the "spite" hypothesis. However, neither of the non-standard preference explanations are able to fully explain all aspects of the experimental data, and we argue for the important role of bounded rationality. We also find that bidder heterogeneity plays an important role in explaining their bidding behavior.Overbidding, Second price auctions, Spite, Joy of winning, Bounded rationality
A Proxy Bidding Mechanism that Elicits all Bids in an English Clock Auction Experiment
This paper reconsiders experimental tests of the English clock auction. We point out why the standard procedure can only use a small subset of all bids, which gives rise to a selection bias. We propose an alternative yet equivalent format that makes all bids visible, and apply it to a âwallet auctionâ experiment. Finally, we test the theory against various alternative hypotheses, and compare the results with those that would have been obtained if one had used the standard procedure. Our results confirm that the standard tests are subject to a significant selection bias
Core-stable rings in second price auctions with common values.
In a commonvalueauction in which the information partitions of the bidders are connected, all rings are core-stable. More precisely, the ex ante expected utilities of rings, at the (noncooperative) sophisticated equilibrium proposed by Einy et al. [Einy, E., Haimanko, O., Orzach, R., Sela, A., 2002. Dominance solvability of second-pricesauctions with differential information. Journal of Mathematical Economics 37, 247â258], describe a cooperative games in characteristic function form, in spite of the underlying strategic externalities. A ring is core-stable if the core of this characteristic function is not empty. Furthermore, every ring can implement its sophisticated equilibrium strategy by means of an incentive compatible mechanism. An example shows that, if the biddersâ information partitions are not connected, rings may no longer be core-stable.Characteristic function; Partition form game; Core; Collusion; Bayesian game; Auctions;
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