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Discussion

Delve into the rarity of Vickrey's sealed second-bid auctions, exploring reasons such as bidder risk aversion, nonindependent information, and bidder reluctance to employ truth-revealing strategies. Discover the beauty contest within auctions and the dilemma of allocating limited valuable assets. Dive into intriguing auction cases like the Soccer World Cup and the Dollar Auction.

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Discussion

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Presentation Transcript

  1. Discussion 09/07/2006

  2. Why are Vickrey’s(sealed second-bid) auctions rare?

  3. Reasons • When multiple objects are to be sold. • Bidder risk aversion • Nonindependent info • Inertia • Cheating • Bidder reluctance to use truth revealing strategies.

  4. Beauty contest or Auction? • How to allocate a valuable asset in a strictly limited supply? • More deserving or highest bidder? • Financial or psychological returns?

  5. Some cases • Soccer World Cup. • Mobile phone auction. • Franchise to run National Lottery.

  6. Shubik’s Dollar Auction • A single dollar is placed for bidding. • The dollar bill goes to the highest bidder. • The second highest bidder also has to pay the amount of his last bid but gets nothing.

  7. References • Rothkopf, Michael H & Teisberg, Thomas J & Kahn, Edward P, 1990. Why are Vickrey’s Auction rare? Journal of Political Economy. • John Kay 12 July 2000. Beaty and the Bidder. Financial Times. • William Poundstone 1992. Prisoner’s Dilemma. Doubleday. • Paul Milgrom Vol. 3 1999. Auctions and Bidding: A Primer. The Journal of Economic Perspectives.

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