Subramaniam, Ramanathan
(2005)
Two Essays in Competitive Price Formation in Auctions.
Doctoral Dissertation, University of Pittsburgh.
(Unpublished)
Abstract
In this work, I look at two competitive auction settings where a profit maximizing seller chooses auctions as a vehicle to sell to strategic bidders. In both essays, the auctioneer's problem is the selection of the optimal auction format. In the first essay, the auctioneer has a single item to sell while in the second essay, there are two items. In this work, I use game theoretic methods to derive the best course of action for the buyer and use this to arrive at the best course of action for the auctioneer. In essay 1, I consider a hybrid (between English outcry and second price sealed bid) auction format where at any point in time, the identity of the highest bidder and the second highest price is known to all. I show that this format would generate higher revenues than the English outcry format if the bidders' valuations are interdependent. This is because of lesser risk of overpayment and winner's curse for the bidders in the hybrid auction and consequently, they are better off bidding their valuations earlier. Such behavior results in a quicker convergence of the outstanding price to the final price realized as the bidders can update their valuations with certainty. I test this claim by comparing objects auctioned in Yahoo! and eBay as eBay follows the hybrid action format while Yahoo! follows the English outcry format and do find that with interdependent object valuations revenue from the hybrid auction format is higher.In the second essay, I consider an auctioneer who has two items to sell. These could be complements or substitutes or independent products. Given a pool of strategic bidders, I investigate whether he is better off auctioning the items sequentially or as a bundle. To do so, I first solve the bidders' optimization problem and use the solution to arrive at the implications for the seller. I find that with a moderate number of bidders (N>4), it is optimal to bundle strong complements only. On the other hand, I find that bundling is optimal when the number of bidders is less than four.
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Details
| Item Type: |
University of Pittsburgh ETD
|
| Status: |
Unpublished |
| Creators/Authors: |
|
| ETD Committee: |
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| Date: |
6 September 2005 |
| Date Type: |
Completion |
| Defense Date: |
25 July 2004 |
| Approval Date: |
6 September 2005 |
| Submission Date: |
31 July 2005 |
| Access Restriction: |
No restriction; Release the ETD for access worldwide immediately. |
| Institution: |
University of Pittsburgh |
| Schools and Programs: |
Joseph M. Katz Graduate School of Business > Business Administration |
| Degree: |
PhD - Doctor of Philosophy |
| Thesis Type: |
Doctoral Dissertation |
| Refereed: |
Yes |
| Uncontrolled Keywords: |
Auction - Theory; Game Theory |
| Other ID: |
http://etd.library.pitt.edu/ETD/available/etd-07312005-235656/, etd-07312005-235656 |
| Date Deposited: |
10 Nov 2011 19:55 |
| Last Modified: |
15 Nov 2016 13:47 |
| URI: |
http://d-scholarship.pitt.edu/id/eprint/8753 |
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