2013

Mixed Strategies in Discriminatory Divisible-good Auctions

Reprint No. 2013:19

Author(s): Edward J. Anderson, Pär Holmberg and Andrew B. PhilpottYear: 2013 Title: RAND Journal of Economics Volume (No.): 44 (1) Pages: 1–32
Online article (restrictions may apply)
Preliminary version


We introduce the concept of an offer distribution function to analyze randomized offer curves in multiunit procurement auctions. We characterize mixed-strategy Nash equilibria for pay-as-bid auctions where demand is uncertain and costs are common knowledge, a setting for which pure-strategy supply function equilibria typically do not exist. We generalize previous results on mixtures over horizontal offers as in Bertrand-Edgeworth games and also characterize novel mixtures over partly increasing supply functions. We show that the randomization can cause considerable production inefficiencies.


Reference:
Anderson, Edward J., Pär Holmberg and Andrew B. Philpott (2013), "Mixed Strategies in Discriminatory Divisible-good Auctions". RAND Journal of Economics 44(1), 1–32.

Pär Holmberg

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