Decision-Analytic Approach to Knockout Auctions

Yigal Gerchak ()
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Yigal Gerchak: Department of Industrial Engineering, Tel Aviv University, Tel-Aviv, Israel 69978

Decision Analysis, 2008, vol. 5, issue 1, 19-21

Abstract: Society seems to have developed several ingenious schemes for allocating jointly owned indivisible items. One such scheme, occasionally used to divide estates among heirs, is a knockout auction (Engelbrecht-Wiggans 1994). In a knockout auction, the joint owners bid for the item; the highest bidder obtains it and pays the others their share of the winning bid. This paper follows the advice of Raiffa and Rothkopf to view auctions from a decision-analytic point of view, and analyzes the optimal bid of an expected-utility maximizing participant in a knockout auction who is uncertain about the bids of others, and contrasts it to the properties of optimal declarations in buy-sell agreements, derived in Gerchak and Fuller (1992).

Keywords: games-group decisions; bidding auctions; knockout auctions; decision analysis (search for similar items in EconPapers)
Date: 2008
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:inm:ordeca:v:5:y:2008:i:1:p:19-21

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