Pure Strategy Equilibria of Single and Double Auctions with Interdependent Values

25 Pages Posted: 8 Aug 2006

See all articles by Aloisio Pessoa de Araujo

Aloisio Pessoa de Araujo

Getulio Vargas Foundation (FGV) - Escola de Pos-Graduacao (EPGE) and IMPA

Luciano I. de Castro

Tippie College of Business

Date Written: July 2006

Abstract

We prove the existence of monotonic pure strategy equilibrium for many types of asymmetric auctions with n bidders and unitary demands, interdependent values and independent types. The assumptions require monotonicity only in the own bidder's type. The payments can be a function of all bids. Thus, we provide a new equilibrium existence result for asymmetrical double auctions and a small number of bidders. The generality of our setting requires the use of special tie-breaking rules. We present a counter-example for interdependent values auctions that shows that sometimes all equilibria are trivial, that is, have zero probability of trade. Nevertheless, we give sufficient conditions for non-trivial equilibrium existence.

Keywords: equilibrium existence in auctions, pure strategy Nash equilibrium, monotonic equilibrium, tie-breaking rule

JEL Classification: C62, C72, D44, D82

Suggested Citation

Araujo, Aloisio Pessoa de and de Castro, Luciano I., Pure Strategy Equilibria of Single and Double Auctions with Interdependent Values (July 2006). Available at SSRN: https://ssrn.com/abstract=923080 or http://dx.doi.org/10.2139/ssrn.923080

Aloisio Pessoa de Araujo

Getulio Vargas Foundation (FGV) - Escola de Pos-Graduacao (EPGE) and IMPA ( email )

R. Dr. Neto de Araujo 320 cj 1307
Rio de Janeiro, Rio de Janeiro 22250-900
Brazil

Luciano I. De Castro (Contact Author)

Tippie College of Business ( email )

108 Pappajohn Building
Iowa City, IA 52242
United States

HOME PAGE: http://https://lucianodecastro.net/

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
75
Abstract Views
763
Rank
588,264
PlumX Metrics