Can auctions select people by their level-k types?

Lawrence Choo (), Todd Kaplan and Xiaoyu Zhou

MPRA Paper from University Library of Munich, Germany

Abstract: In this paper, we seek to determine if auctions can be used to select players according to their level-k types. To do so, we embed auctions into the p-beauty contest game. We find that by using different designs, we can get the auction winners to be either the lower level-k types or the higher level-k types. In particular, when the value of winning the auction is increasing in the level-k types of all the players, higher level-k players bid higher. When the value of winning the auction is decreasing in the level-k types of all the players, the lower level-k players bid higher. Taken together, our experiment confirms that we can use auctions to select players by their level-k types. This shows that auctions can allow an economic designer to affect the outcome of a game through the selection of level-k types entering to play the game.

Keywords: p-beauty contest game; level-k; auctions; mechanism design. (search for similar items in EconPapers)
JEL-codes: C72 C90 D44 (search for similar items in EconPapers)
Date: 2019-09
New Economics Papers: this item is included in nep-des, nep-exp, nep-gth and nep-ore
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