Discussion
09/07/2006
Why are Vickrey’s(sealed
second-bid) auctions rare?
Reasons
When multiple objects are to be sold.
Bidder risk aversion
Nonindependent info
Inertia
Cheating
Bidder reluctance to use truth revealing
strategies.
Beauty contest or Auction?
How to allocate a valuable asset in a
strictly limited supply?
More deserving or highest bidder?
Financial or psychological returns?
Some cases
Soccer World Cup.
Mobile phone auction.
Franchise to run National Lottery.
Shubik’s Dollar Auction
A single dollar is placed for bidding.
The dollar bill goes to the highest bidder.
The second highest bidder also has to pay
the amount of his last bid but gets nothing.
References
 Rothkopf, Michael H & Teisberg, Thomas J & Kahn,
Edward P, 1990. Why are Vickrey’s Auction rare? Journal
of Political Economy.
 John Kay 12 July 2000. Beaty and the Bidder. Financial
Times.
 William Poundstone 1992. Prisoner’s Dilemma.
Doubleday.
 Paul Milgrom Vol. 3 1999. Auctions and Bidding: A
Primer. The Journal of Economic Perspectives.