Essays on auctions and mechanism design

Kim, Kwanghyun

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https://hdl.handle.net/2142/105014 Copy

Description

Title

Essays on auctions and mechanism design

Author(s)

Kim, Kwanghyun

Issue Date

2019-04-15

Director of Research (if dissertation) or Advisor (if thesis)

Williams, Steven R.

Doctoral Committee Chair(s)

Williams, Steven R.

Committee Member(s)

• Bernhardt, Dan
• Lemus, Jorge
• Marshall, Guillermo

Department of Study

Economics

Discipline

Economics

Degree Granting Institution

University of Illinois at Urbana-Champaign

Degree Name

Ph.D.

Degree Level

Dissertation

Keyword(s)

• Auctions
• Mechanism Design
• Mechanisms
• Ambiguity
• Maxmin
• Interdependent Values

Abstract

There are two directions in studying trading mechanisms: studying outcomes that existing mechanisms generate and designing mechanisms that satisfy desired outcomes. In this dissertation, I explore trading mechanisms in these directions. In the first chapter, I study the first price auction with independent private valuations, wherein each bidder faces ambiguity about the probability distribution from which the other bidders’ valuations for the item are drawn. Each bidder is ambiguity averse and this ambiguity is represented by a set of priors. In this informational setting, I identify a maxmin Bayesian Nash equilibrium of the auction and show that the bidders’ bids and the seller’s expected revenue increase with the level of the bidders’ ambiguity if the bidders’ valuation distribution satisfies the monotone inverse hazard rate condition. I also show that the seller’s expected revenue from the first price auction is greater than that from the second price auction. In the second chapter, I examine a trading mechanism in which traders’ valuations for an item are interdependent. Trade can occur between multiple buyers and multiple sellers. The transfer rules of the trading mechanism are motivated by the second price auction. The mechanism satisfies ex-post efficiency, ex-post incentive compatibility, and ex-post individual rationality. An example in which the mechanism generates a budget deficit is provided. The result of this chapter leads to my work on an impossibility result in the next chapter. In the third chapter, I study trading mechanisms in which traders’ valuations for an indivisible item are interdependent. Trade can occur between one buyer and one seller. Under the assumption that each trader’s information has a greater marginal effect on her own valuation than on the other trader’s valuation, no trading mechanisms satisfying ex-post efficiency, ex-post incentive compatibility, ex-post individual rationality, and no ex-post budget deficit exist.

Graduation Semester

2019-05

Type of Resource

text

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Copyright and License Information

Copyright 2019 Kwanghyun Kim

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