Efficient investment in a dynamic auction environment

We analyze an environment in which biddersʼ private values change over time due to both private investments and exogenous shocks. We demonstrate that a highly-decentralized mechanism achieves efficiency. The mechanism requires a stage of costly public announcements (i.e., signaling) to induce efficient investment. For this reason, an equilibrium selection issue arises, but can be handled by a minor modification in the spirit of virtual implementation.

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Year of publication:	2012
Authors:	Daley, Brendan ; Schwarz, Michael ; Sonin, Konstantin
Published in:	Games and Economic Behavior. - Elsevier, ISSN 0899-8256. - Vol. 75.2012, 1, p. 104-119
Publisher:	Elsevier
Subject:	Auctions \| Efficient mechanism design \| Signaling

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Type of publication:	Article
Classification:	D44 - Auctions ; D82 - Asymmetric and Private Information
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10011049751