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Menu Auctions, Resource Allocation, and Economic Influence

Menu Auctions, Resource Allocation, and Economic Influence Abstract In many examples of competitive bidding (e.g., government construction contracting) the relevant object is either partially divisible or ill-defined, in contrast to much of the recent theoretical work on auctions. In this paper we consider a more general class of auctions, in which bidders name a “menu” of offers for various possible actions (allocations) available to the auctioneer. We focus upon “first-price” menu auctions under the assumption of complete information, and show that, for an attractive refinement of the set of Nash Equilibria, an efficient action always results. Our model also has application to situations of economic influence, in which interested parties independently attempt to influence a decision-maker's action. * We would like to thank Joseph Farrell, Jerry Green, Andreu Mas-Colell, William Rogerson, Garth Saloner, and especially Franklin Fisher and Eric Maskin, as well as seminar participants at Harvard, IMSSS, M.I.T., Stanford, the University of California, San Diego, and the University of Pennsylvania for helpful comments and discussions. We would also like to thank the C.I.C. Construction Company for providing helpful information concerning government construction project bidding. The second author gratefully acknowledges financial support from the Sloan Foundation, through its grant to the M.I.T. Department of Economics. This content is only available as a PDF. © 1986 by the President and Fellows of Harvard College http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png The Quarterly Journal of Economics Oxford University Press

Menu Auctions, Resource Allocation, and Economic Influence

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Publisher
Oxford University Press
Copyright
© 1986 by the President and Fellows of Harvard College
ISSN
0033-5533
eISSN
1531-4650
DOI
10.2307/1884639
Publisher site
See Article on Publisher Site

Abstract

Abstract In many examples of competitive bidding (e.g., government construction contracting) the relevant object is either partially divisible or ill-defined, in contrast to much of the recent theoretical work on auctions. In this paper we consider a more general class of auctions, in which bidders name a “menu” of offers for various possible actions (allocations) available to the auctioneer. We focus upon “first-price” menu auctions under the assumption of complete information, and show that, for an attractive refinement of the set of Nash Equilibria, an efficient action always results. Our model also has application to situations of economic influence, in which interested parties independently attempt to influence a decision-maker's action. * We would like to thank Joseph Farrell, Jerry Green, Andreu Mas-Colell, William Rogerson, Garth Saloner, and especially Franklin Fisher and Eric Maskin, as well as seminar participants at Harvard, IMSSS, M.I.T., Stanford, the University of California, San Diego, and the University of Pennsylvania for helpful comments and discussions. We would also like to thank the C.I.C. Construction Company for providing helpful information concerning government construction project bidding. The second author gratefully acknowledges financial support from the Sloan Foundation, through its grant to the M.I.T. Department of Economics. This content is only available as a PDF. © 1986 by the President and Fellows of Harvard College

Journal

The Quarterly Journal of EconomicsOxford University Press

Published: Feb 1, 1986

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