A theoretical and experimental investigation of auctions in multi-unit demand environments

Citation

Noussair, Charles Nabih (1993) A theoretical and experimental investigation of auctions in multi-unit demand environments. Dissertation (Ph.D.), California Institute of Technology. doi:10.7907/vsj7-a337. https://resolver.caltech.edu/CaltechTHESIS:01042013-114124291

Abstract

In many existing markets demanders wish to buy more than one unit from a group of identical units of a commodity. Often, the units are sold simultaneously by auction. The vast majority of literature pertaining to the economics of auctions, however, considers environments in which demanders buy at most one object. In this dissertation we present a collection of results concerning the generalization of theoretical and experimental results from environments in which buyers have single-unit demands to environments with two-unit demands. We derive necessary and sufficient conditions for a set of bidding strategies to be a symmetric monotone equilibrium to a uniform price sealed bid auction. We prove that equilibrium bidding strategies converge to truthful revelation as the number of bidders gets large. We also prove that the uniform price sealed bid auction and the English clock are not isomorphic in the two-unit demand environment. Either type of auction may generate higher efficiency and either may generate higher revenue. Finally, we report a set of experimental results which demonstrates that the revenue generating properties of the two auctions are different in two-unit demand environments. In the experimental environment, more revenue is generated by the uniform price sealed bid auction than the English clock, and more revenue is generated per market period if the market is run only once than if it is repeated with the same participants.

Thesis Files