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You are here: Home Seminars 08.01. Micro Theory Seminar: Tom Wiseman

08.01. Micro Theory Seminar: Tom Wiseman

Micro Theory Seminar with Tom Wiseman (University of Texas at Austin)

Event details
What
  • Micro Theory Seminar
When Jan 08, 2020
from 16:30 to 17:45
Where Faculty Room
Contact Name Francesc Dilmé
Contact Email
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Topic

"How to Sell in a Sequential Auction Market"

Abstract

A seller with one unit of a good faces N≥3 buyers and a single competitor who sells  one  other  identical  unit  in  a  second-price  auction  with  a  reserve  price.   Buyers who  do  not  get  the  good  from  the  seller  will  compete  in  the  competitor’s  auction.  We characterize the optimal mechanism for the seller in this setting.  The first-order approach typically fails, so we develop new techniques to find the solution.  The optimal mechanism features transfers from buyers with the two highest valuations, allocation to the buyer with the second-highest valuation, and a withholding rule that depends on the highest two or three valuations. It can be implemented by a modified third-price auction or a pay-your-bid auction with a rebate.  We show that the optimal withholding rule raises significantly more revenue than would a standard reserve price.  We also use our results to study cross-mechanism spillovers in a sequential game where the competing seller chooses her reserve price knowing that the first seller will respond with an optimal mechanism.

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