The Ascending Auction Paradox

@inproceedings{Ausubel1999TheAA,
  title={The Ascending Auction Paradox},
  author={Lawrence M. Ausubel and Jesse A. Schwartz},
  year={1999}
}
We examine uniform-price, multiple-unit auctions that are dynamic rather than sealedbid, auctions where the price ascends, giving bidders the chance to observe and respond to the bidding. In this dynamic setting, subgame perfection can be exploited to refine the set of equilibria. Restricting attention to ascending auctions where two bidders with complete and perfect information alternate placing bids until the market clears, we show that in the unique equilibrium each bidder reduces her… CONTINUE READING
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