Sequential Auctions with Multiple Synergies

Pranjal Chandrakar, Manaswini Bhalla () and Shubhabrata Das ()
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Pranjal Chandrakar: School of Management, Mahindra University, Survey No. 62/1A, Bahadurpally, Jeedimetla, Hyderabad 500043, Telangana, India
Manaswini Bhalla: Economics & Social Sciences, Indian Institute of Management Bangalore, Bannerghatta Road, Bengaluru 560076, Karnataka, India
Shubhabrata Das: Decision Sciences, Indian Institute of Management Bangalore, Bannerghatta Road, Bengaluru 560076, Karnataka, India

International Game Theory Review (IGTR), 2023, vol. 25, issue 01, 1-39

Abstract: We examine the sequential auctions of nonidentical and synergistically related (complementary/substitutable) objects. The objects are divided into categories, which are collections of substitutable items. Inter-category objects are complements. Bidders demand one unit from each category and aim to create a bundle of inter-category objects. We solve for all equilibria of the game with an exogenous order of sale. We establish that the sequential auction mechanism can achieve efficient outcomes subject to the order in which objects are presented during the auction. Specifically, we show that an efficient outcome is achieved if, in each category, the object that is valued more by both bidders (if any) is auctioned first. We show that the sequential auction mechanism suffers from the exposure problem in the presence of multiple synergies. We establish that the order in which the categories are presented during the auction may affect objects’ selling prices. Specifically, a decreasing trend in selling prices is observed in some of the outcomes.

Keywords: Multi-unit auctions; sequential auctions; multiple synergies; categories (search for similar items in EconPapers)
JEL-codes: D40 D44 (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1142/S0219198923500019

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