In this paper, we investigate an incomplete information model of generalized second price auctions with allocative externalities originating from the heterogeneous match rates of bidders. A novel feature of our model is that it generates endogenous click-through rates (CTRs). In this setting, we establish existence of symmetric efficient equilibria for common classes of primitives. This contrasts with the findings of Gomes and Sweeney (2014), who study a similar model but with fixed CTRs. Moreover, nonexistence results require strong assumptions on the primitives of the model. We conclude that existence of equilibria in GSP with incomplete information is quite general.
We study a model in which before a conflict between two parties escalates into a war (in the form of an all-pay auction), a party can offer a take-it-or-leave-it bribe to the other one for a peaceful settlement. We distinguish between various degrees of peace prospects-implementability, weak security and strong security. We first characterize the necessary and sufficient conditions for peace implementability and weak security. We then show that weak security implies strong security. We also consider a requesting-a-bribe game and characterize the necessary and sufficient conditions for existence of a robust peaceful equilibrium. We find that all such robust peaceful equilibria share the same request.
We study collusion in a second price auction with two bidders in a dynamic environment. One bidder can make a take-it-or-leave-it collusion proposal, which consists of both an offer and a request of bribes, to the opponent. We show there always exists a robust equilibrium in which the collusion success probability is one. In the equilibrium, the interim expected payoff of the collusion initiator Pareto dominates the counterpart in any robust equilibria of the single-option model (Esö and Schummer ( 2004)) and any other separating equilibria in our model.
scite is a Brooklyn-based organization that helps researchers better discover and understand research articles through Smart Citations–citations that display the context of the citation and describe whether the article provides supporting or contrasting evidence. scite is used by students and researchers from around the world and is funded in part by the National Science Foundation and the National Institute on Drug Abuse of the National Institutes of Health.