Channel Auctions

20 Pages Posted: 31 Aug 2018

See all articles by Eduardo M. Azevedo

Eduardo M. Azevedo

University of Pennsylvania - The Wharton School

David M. Pennock

Microsoft Corporation - Microsoft Research, New York City

E. Glen Weyl

Microsoft Research New York City; Princeton University - Julis Rabinowitz Center for Public Policy and Finance

Date Written: August 30, 2018

Abstract

Traditionally auctions have featured either an upper bound on the equilibrium price(s) that descends over time (e.g. Dutch auctions) or a lower bound on the equilibrium price(s) that ascends over time (e.g. English auctions). We argue that in many cases, auctions featuring both (viz. a narrowing channel of prices) will tend to outperform either. This channel auction preserves most of the contrasting benefits of both the English (truthful revelation) and Dutch (security for necessary information acquisition) auctions regarding behavior in the English and Dutch components of the auction. However, it can also perform well in cases where information acquisition is potentially important but also potentially unnecessary and wasteful. We discuss directions for research on how to modulate the channel convergence process using auction- revealed information, how to speed the convergence using binary search and extensions to multiple goods. 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

Azevedo, Eduardo M. and Pennock, David M. and Weyl, Eric Glen, Channel Auctions (August 30, 2018). Available at SSRN: https://ssrn.com/abstract=3241744 or http://dx.doi.org/10.2139/ssrn.3241744

Eduardo M. Azevedo

University of Pennsylvania - The Wharton School ( email )

3641 Locust Walk
Philadelphia, PA 19104-6365
United States

HOME PAGE: http://www.eduardoMazevedo.com

David M. Pennock

Microsoft Corporation - Microsoft Research, New York City ( email )

641 Avenue of Americas
New York, NY 10011
United States

Eric Glen Weyl (Contact Author)

Microsoft Research New York City ( email )

641 Avenue of the Americas
7th Floor
New York, NY 10011
United States
8579984513 (Phone)

HOME PAGE: http://www.glenweyl.com

Princeton University - Julis Rabinowitz Center for Public Policy and Finance ( email )

Princeton University
Princeton, NJ 08544-1021
United States

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