Efficient Actions in Dynamic Auction Environment
We model an environment, where bidders private values may change over time as a result of both costly private actions and exogenous shocks. Examples of private actions include investment and entry decisions; shocks might be due to exogenous changes in a potential buyer’s circumstances. We describe an efficient auction mechanism that maximizes the final value of the object to the winning bidder net of the total cost of investment by all agents. In particular, we show that costly signaling is necessary for efficient entry when agents receive private information both before and after they make the entry decision. To rule out pooling equilibria that coexist with the efficient equilibrium in the basic mechanism, we introduce a virtual implementation-style mechanism that (i) is almost efficient; (ii) forces players to coordinate on the separating equilibrium; and (iii) is simple enough to be potentially useful in practice.
Link to the paper http://rwj.berkeley.edu/schwarz/publications/au%20Dec%202004.pdf
Speaker Details
Michael Schwarz is a Principle Research Scientist at Yahoo! Research in Berkeley, CA. Prior to joining Yahoo! he was a National Fellow at the Hoover institution at Stanford, a Robert Wood Johnson Foundation Scholar at UC Berkeley he was on the faculty at Harvard University Economics Department from 1999 to 2004. He is also a member of the NBER. Dr. Schwarz specializes in economic theory and its applications to business decision making and public policy. He works on a wide range of topics that include auction theory, decision making under uncertainty, economics of standards, economics of drug procurement and Medicare part D, and microstructure of financial markets. His current work applies game theory to the market for Internet advertisement and marketplace design.
- Date:
- Speakers:
- Michael Schwarz
-
-
Jeff Running
-
