Equilibria in a Japanese-English Auction with Discrete Bid Levels for the Wallet Game

Ricardo Gon alves () and Indrajit Ray ()
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Ricardo Gon alves: Cat lica Porto Business School
Authors registered in the RePEc Author Service: Ricardo Gonçalves

No E2016/13, Cardiff Economics Working Papers from Cardiff University, Cardiff Business School, Economics Section

Abstract: We consider the set-up of a Japanese-English auction with exogenously fixed discrete bid levels for the wallet game with two bidders. We prove that bidding twice the signal - the equilibrium strategy with continuous bid levels - is never an equilibrium in this set up. We show that partition equilibria exist that may be separating or pooling. We illustrate some separating and pooling equilibria with two and three discrete bid levels; we also compare the revenues of the seller from these equilibria and thereby find the optimal bid levels in these cases.

Keywords: Japanese-English auctions; wallet game; discrete bids; partitions; pooling equilibrium; separating equilibrium (search for similar items in EconPapers)
JEL-codes: C72 D44 (search for similar items in EconPapers)
Pages: 22 pages
Date: 2016-12
New Economics Papers: this item is included in nep-gth and nep-mic
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Persistent link: https://EconPapers.repec.org/RePEc:cdf:wpaper:2016/13

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