About | Contact Us | Register | Login
ProceedingsSeriesJournalsSearchEAI
sg 16(10): e5

Research Article

Auction Design with Advised Bidders

Cite
BibTeX Plain Text
  • @ARTICLE{10.4108/eai.8-8-2015.2260860,
        author={Andrey Malenko and Anton Tsoy},
        title={Auction Design with Advised Bidders},
        journal={EAI Endorsed Transactions on Serious Games},
        volume={3},
        number={10},
        publisher={ACM},
        journal_a={SG},
        year={2015},
        month={8},
        keywords={auction design, cheap-talk, full revelation, english auction, communication},
        doi={10.4108/eai.8-8-2015.2260860}
    }
    
  • Andrey Malenko
    Anton Tsoy
    Year: 2015
    Auction Design with Advised Bidders
    SG
    EAI
    DOI: 10.4108/eai.8-8-2015.2260860
Andrey Malenko1,*, Anton Tsoy2
  • 1: MIT Sloan School of Management
  • 2: EIEF
*Contact email: amalenko@mit.edu

Abstract

This paper studies efficient and optimal auction design where bidders do not know their values and solicit advice from informed but biased advisors via a cheap-talk game. When advisors are biased toward overbidding, we characterize efficient equilibria of static auctions and equilibria of the English auction under the NITS condition (Chen, Kartik and Sobel (2008)). In static auctions, advisors transmit a coarsening of their information and a version of the revenue equivalence holds. In contrast, in the English auction, information is transmitted perfectly from types in the bottom of the distribution, and pooling happens only at the top. Under NITS, any equilibrium of the English auction dominates any efficient equilibrium of any static auction in terms of both efficiency and the seller's revenue. The distinguishing feature of the English auction is that information can be transmitted over time and bidders cannot submit bids below the current price of the auction. This results in a higher efficiency due to better information transmission and allows the seller to extract additional profits from the overbidding bias of advisors. When advisors are biased toward underbidding, there is an equilibrium of the Dutch auction that is more efficient than any efficient equilibrium of any static auction, however, it can bring lower expected revenue.

Keywords
auction design, cheap-talk, full revelation, english auction, communication
Published
2015-08-13
Publisher
ACM
http://dx.doi.org/10.4108/eai.8-8-2015.2260860

Copyright © 2015 A. Malenko and A. Tsoy, licensed to EAI. This is an open access article distributed under the terms of the Creative Commons Attribution licence (http://creativecommons.org/licenses/by/3.0/), which permits unlimited use, distribution and reproduction in any medium so long as the original work is properly cited.

EBSCOProQuestDBLPDOAJPortico
EAI Logo

About EAI

  • Who We Are
  • Leadership
  • Research Areas
  • Partners
  • Media Center

Community

  • Membership
  • Conference
  • Recognition
  • Sponsor Us

Publish with EAI

  • Publishing
  • Journals
  • Proceedings
  • Books
  • EUDL