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Channel Auctions

Author

Listed:
  • Eduardo M. Azevedo

    (The Wharton School, University of Pennsylvania, Philadelphia, Pennsylvania 19104;)

  • David M. Pennock

    (Microsoft Research, Redmond, Washington 98052;)

  • Bo Waggoner

    (University of Colorado, Boulder, Colorado 80303)

  • E. Glen Weyl

    (Microsoft Research, Redmond, Washington 98052;)

Abstract

Standard auction formats feature either an upper bound on the equilibrium price that descends over time (as in the Dutch auction) or a lower bound on the equilibrium price that ascends over time (as in the English auction). We show that in some settings with costly information acquisition, auctions featuring both (viz., a narrowing channel of prices) outperform the standard formats. This Channel auction preserves some of benefits of both the English (truthful revelation) and Dutch (security for necessary information acquisition) auctions. Natural applications include housing, online auction sites like eBay, recording transactions on blockchains, and spectrum rights.

Suggested Citation

  • Eduardo M. Azevedo & David M. Pennock & Bo Waggoner & E. Glen Weyl, 2020. "Channel Auctions," Management Science, INFORMS, vol. 66(5), pages 2075-2082, May.
    • Handle: RePEc:inm:ormnsc:v:66:y:2020:i:5:p:2075-2082
    DOI: 10.1287/mnsc.2019.3487
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    References listed on IDEAS

    as
    1. Liran Einav & Chiara Farronato & Jonathan Levin & Neel Sundaresan, 2018. "Auctions versus Posted Prices in Online Markets," Journal of Political Economy, University of Chicago Press, vol. 126(1), pages 178-215.
    2. William Vickrey, 1961. "Counterspeculation, Auctions, And Competitive Sealed Tenders," Journal of Finance, American Finance Association, vol. 16(1), pages 8-37, March.
    3. Milgrom, Paul R & Weber, Robert J, 1982. "A Theory of Auctions and Competitive Bidding," Econometrica, Econometric Society, vol. 50(5), pages 1089-1122, September.
    Full references (including those not matched with items on IDEAS)

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