Management Science, Forthcoming
16 Pages Posted: 31 Aug 2018 Last revised: 27 Aug 2019
Date Written: August 26, 2019
Standard auction formats feature either an upper bound on the equilibrium price that descends over time (as in the Dutch auction) or a lower bound on the equilibrium price that ascends over time (as in the English auction). We show that, in some settings with costly information acquisition, auctions featuring both (viz. a narrowing channel of prices) outperform the standard formats. This Channel auction preserves some of benefits of both the English (truthful revelation) and Dutch (security for necessary information acquisition) auctions. Natural applications include housing, online auction sites like eBay, recording transactions on blockchains and spectrum rights.
Keywords: auctions, English, Dutch, information acquisition, exposure problem
JEL Classification: D44, D47, D83, C44
Suggested Citation: Suggested Citation