Hannu Vartiainen
Auction Design without Commitment
Aboa Centre for Economics
Discussion Paper No. 44
March 2009
ABSTRACT
We study auction design when parties cannot commit to the
mechanism. The seller may change the rules of the game any
number of times and the buyers may choose their outside option at
any stage of the game. A dynamic consistency condition and an
optimality condition property are defined to characterize the
seller's mechanism selection behavior. The unique stationary
mechanism selection rule that meets the conditions is the English
auction.
JEL: C72, D44, D78
Keywords: auctions, commitment, consistency, one-deviation
property, stationarity
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