Inefficiency of Equilibria in Query Auctions with Continuous Valuations

27 Pages Posted: 22 Jun 2006

See all articles by Elena Grigorieva

Elena Grigorieva

Maastricht University - Department of Economics

P. Jean-Jacques Herings

Tilburg University

Rudolf Muller

University of Maastricht

Dries Vermeulen

Maastricht University - Department of Quantitative Economics

Multiple version iconThere are 2 versions of this paper

Date Written: June 2006

Abstract

We show that, when bidders have continuous valuations, any ex post equilibrium in an ex post individually rational query auction can only be ex post efficient when the running time of the auction is infinite for almost all realizations of valuations of the bidders. We also show that this result applies to the general class of bisection auctions. In contrast we show that, when we allow for inefficient allocations with arbitrarily small probability, there is a query auction (to be more specific, a bisection auction) that attains this level of approximate efficiency in equilibrium, while additionally the running time of the auction in equilibrium is finite for all realizations of valuations.

Keywords: Query acutions, ex post equilibrium, efficiency

JEL Classification: C72, D44

Suggested Citation

Grigorieva, Elena and Herings, P. Jean-Jacques and Muller, Rudolf and Vermeulen, Dries, Inefficiency of Equilibria in Query Auctions with Continuous Valuations (June 2006). Available at SSRN: https://ssrn.com/abstract=910511 or http://dx.doi.org/10.2139/ssrn.910511

Elena Grigorieva

Maastricht University - Department of Economics ( email )

P.O. Box 616
Maastricht, 6200 MD
Netherlands
++ 31 43 388 3853 (Phone)

P. Jean-Jacques Herings (Contact Author)

Tilburg University ( email )

Department of Econometrics and Operations Research
P.O. Box 90153
Tilburg, 5000 LE
Netherlands
+31 13 4668797 (Phone)
5000 LE (Fax)

HOME PAGE: http://https://sites.google.com/view/jean-jacques-herings/home

Rudolf Muller

University of Maastricht ( email )

Department of Quantitative Economics
P.O. Box 616
6200 MD Maastricht
Netherlands

Dries Vermeulen

Maastricht University - Department of Quantitative Economics ( email )

P.O. Box 616
Maastricht, 6200 MD
Netherlands
+ 31 43 388 48 31 (Phone)

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