THE WAIT-AND-SEE OPTION IN ASCENDING PRICE AUCTIONS

Cake-cutting protocols aim at dividing a ``cake'' (i.e., a divisible resource) and assigning the resulting portions to several players in a way that each of the players feels to have received a ``fair'' amount of the cake. An important notion of fairness is envy-freeness: No player wishes to switch the portion of the cake received with another player's portion. Despite intense efforts in the past, it is still an open question whether there is a \emph{finite bounded} envy-free cake-cutting protocol for an arbitrary number of players, and even for four players. We introduce the notion of degree of guaranteed envy-freeness (DGEF) as a measure of how good a cake-cutting protocol can approximate the ideal of envy-freeness while keeping the protocol finite bounded (trading being disregarded). We propose a new finite bounded proportional protocol for any number n \geq 3 of players, and show that this protocol has a DGEF of 1 + \lceil (n^2)/2 \rceil. This is the currently best DGEF among known finite bounded cake-cutting protocols for an arbitrary number of players. We will make the case that improving the DGEF even further is a tough challenge, and determine, for comparison, the DGEF of selected known finite bounded cake-cutting protocols.Comment: 37 pages, 4 figure

Manipulative auction design

This paper considers an auction design framework in which bidders get partial feedback about the distribution of bids submitted in earlier auctions: either bidders are asymmetric but past bids are disclosed in an anonymous way or several auction formats are being used and the distribution of bids but not the associated formats are disclosed. I employ the analogy-based expectation equilibrium (Jehiel, 2005) to model such situations. First-price auction in which past bids are disclosed in an anonymous way generates more revenues than the second-price auction while achieving an efficient outcome in the asymmetric private values two-bidder case with independent distributions. Besides, by using several auction formats with coarse feedback a designer can always extract more revenues than in Myerson's optimal auction, and yet less revenues than in the full information case whenever bidders enjoy ex-post quitting rights and the assignment and payment rules are monotonic in bids. These results suggest an important role of feedback disclosure as a novel instrument in mechanism design.Auction design, feedback equilibrium, manipulation

Determinants and Effects of Reserve Prices in Hattrick Auctions

We use a unique hand collected data set of 6,258 auctions from the online football manager game Hattrick to study determinants and effects of reserve prices. We find that chosen reserve prices exhibit both very sophisticated and suboptimal behavior by the sellers. On the one hand, reserve prices are adjusted remarkably nuanced to the resulting sales price pattern. However, reserve prices are too clustered at zero and at multiples of e 50,000 as to be consistent with fully rational behavior. We recover the value distribution and simulate the loss in expected revenue from suboptimal reserve prices. Finally, we find evidence for the sunk cost fallacy as there is a substantial positive effect on the reserve price when the player has been acquired previously

Two-sided Certification: The market for Rating Agencies

Certifiers contribute to the sound functioning of markets by reducing a symmetric information. They, however, have been heavily criticized during the 2008-09 financial crisis. This paper investigates on which side of the market a monopolistic profit-maximizing certifier offers his service. If the seller demands a rating, the certifier announces the product quality publicly, whereas if the buyer requests a rating it remains his private information. The model shows that the certifier offers his service to sellers and buyers to maximize his own profit with a higher share from the sellers. Overall, certifiers increase welfare in specific markets. Revenue shifts due to the financial crisis are also explained

Discrete Clock Auctions: An Experimental Study

We analyze the implications of different pricing rules in discrete clock auctions. The two most common pricing rules are highest-rejected bid (HRB) and lowest-accepted bid (LAB). Under HRB, the winners pay the lowest price that clears the market; under LAB, the winners pay the highest price that clears the market. Both the HRB and LAB auctions maximize revenues and are fully efficient in our setting. Our experimental results indicate that the LAB auction achieves higher revenues. This also is the case in a version of the clock auction with provisional winners. This revenue result may explain the frequent use of LAB pricing. On the other hand, HRB is successful in eliciting true values of the bidders both theoretically and experimentally.Auctions, clock auctions, spectrum auctions, experimental economics, behavioral economics, market design

An Experimental Analysis of Parallel Multiple Auctions

At online auction platforms we often observed that substitutable goods are auctioned concurrently with auctions ending at the same time. I introduce an experimental setup of three sellers and four buyers in an ascending second price auction environment where every seller runs one auction with a homogeneous good and the buyers are confronted with single unit demand. I find that sellers revenue is significantly lower than theory predicts due to the fact that some auctions did not receive bids whereas other auctions concentrated the bids of all bidders. Moreover, I observe a statistically higher revenue of sellers setting the minimum starting price. Furthermore, my study shows that the buyers submit bids which are significantly lower than the private valuation every buyer receives. Comparing the efficiency of the parallel multiple auction setup to a double auction control experiment, I find a significant lower efficiency in parallel multiple auctions due to the coordination failure of the buyers.simultaneous auctions, internet auctions, market design, electronic business

Just a small delay? Bidding Behavior and Efficiency in overlapping multiple auctions

Online auction platforms like eBay provide a wide range of auctions containing substitutable goods. Some of these auctions exhibit parallel elements which means that two or more auctions run side by side for a certain time. Experiments have shown that multiple auctions ending at the same time, result in significantly lower efficiency due to the coordination failure of the buyers. I introduce an experimental setup with three sellers and four buyers in an overlapping multiple second price auction environment, where every seller runs one auction with a homogeneous good and the buyers are confronted with single unit demand. Furthermore, I vary the degree of the overlap between the successive auctions. One main result is that sellers revenue is significantly higher in overlapping multiple auctions than in parallel multiple auctions. Moreover, I observe a lower coordination failure of the buyers in overlapping auctions than in parallel multiple auctions. Due to these results, efficiency in overlapping multiple auctions is higher compared to the efficiency in parallel multiple auctions.internet auctions, cross bidding, market design, electronic business

On bidding markets: the role of competition

This paper analyzes the effects of industrial concentration on bidding behaviour and hence, on the seller´s expected proceeds. These effects are studied under the CIPI model, an affiliated value set-up that nests a variety of valuation and information environments. We formally decompose the revenue effects coming from less competition into four types: a competition effect, an inference effect, a winner´s curse effect and a sampling effect. The properties of these effects are discussed and conditions for (non) monotonicity of both the equilibrium bid and revenue are stated. Our results suggest that it is more likely that the seller benefits from less competition in markets with more complete valuation and information structures