Equilibrium selection in interdependent value auctions

Elnaz Bajoori and Dries Vermeulen

Mathematical Social Sciences, 2019, vol. 98, issue C, 47-56

Abstract: In second-price auctions with interdependent values, bidders do not necessarily have dominant strategies. Moreover, such auctions may have many equilibria. In order to rule out the less intuitive equilibria, we define the notion of distributional strictly perfect equilibrium (DSPE) for Bayesian games with infinite type and action spaces. This equilibrium is robust against arbitrary small perturbations of strategies. We apply DSPE to a class of symmetric second-price auctions with interdependent values. We show that the efficient equilibrium defined by Milgrom (1981) is a DSPE, while a class of less intuitive, inefficient, equilibria introduced by Birulin (2003) is not.

Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0165489619300125
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Equilibrium selection in interdependent value auctions (2017)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:matsoc:v:98:y:2019:i:c:p:47-56

DOI: 10.1016/j.mathsocsci.2019.01.003

Access Statistics for this article

Mathematical Social Sciences is currently edited by J.-F. Laslier

More articles in Mathematical Social Sciences from Elsevier
Bibliographic data for series maintained by Catherine Liu ().