Sequential Auctions And Information Revelation For Substitutes With Hotelling Differences

In recent year,the multi-object auction is one of the most active research fields in economics,management and decision science.Besides auction mechanisms,competition environments and risk attitudes,differences among objects and buyers' preferences are the main factors that affect the results of multi-object auctions.The existing researches on multi-object auctions focus on auctions for homogeneous objects and combinatorial auctions for heterogeneous complements,but the researches on heterogeneous substitutes are relatively rare and most of them consider perfect substitutes(i.e.,every buyer is indifferent to winning any one of them)or imperfect substitutes with independent valuations.However,a large number of objects in real-life auctions are similar and slightly different.These objects are approximately substitutable for buyers with unit-demand and buyers' valuations for them are multi-dimensional and interdependent.This thesis aims to reveal the general law in auctions for close substitutes with interdependent valuations.It not only helps improve and deepen theoretical researches on multi-object auctions,but also propels the applications of auction theory in practice.The differences among objects are diverse.How to describe these differences and the consequent effects on buyers' valuations is a crucial problem.Transportation costs are one important factor which causes differences and close substitutability among objects in the supply chains.Inspired by this fact,this thesis uses the Hotelling model to describe a class of close substitutes with spatial differences.Buyers and sellers(or objects)are assumed to be located in the same traffic line.Therefore,the location of a buyer in the traffic line not only can be used to describe the interdependence of buyers' valuations for multi-objects,but also reduces difficulties of theoretical analyses caused by the multidimensional and interdependent nature of valuations.In the setting of two-stage sequential auctions for these types of substitutes and under general distribution conditions,this thesis analyzes equilibrium bids and their characteristics under various information structures,and further discusses the efficiency conditions of auctions.How to maximize the seller's revenues is the focal point of this study.Firstly,the seller can increase his revenue by means of choices or designs of differences among objects.Based on the unilateral efficiency of the auction,optimal locations of objects in the traffic line are derived.Different from the results in the traditional Hotelling duopoly game,this thesis points out that optimal locations of objects which can maximize the seller's revenues are non-overlapped.Therefore,maintaining differences among objects is favorable to the seller.Secondly,this thesis discusses whether the seller can improve his revenues by disclosing or concealing information about differences among objects.The existing related researches mostly only consider the pre-commitment,which is made before the seller obtains his information.However,this thesis consideres both the seller's pre-commitment and his ex-post strategic information disclosure,which is made after he obtains information.This thesis finds that if the first auctioned object is located at one end of the traffic line and the transport cost is a linear function,the seller is indifferent to committing to concealing or disclosing information.However,ex-post disclosure of full information is always superior to full information concealment and part disclosure.Finally,this thesis thoroughly studies effects of disclosing bids' rankings between auctions on buyers' bids and sellers' revenues.As far as we know,no study has discussed the bids' rankings disclosure policy,under which bids' rankings instead of actual bids are disclosed.This disclosure policy is unique in that it leads to information asymmetry among buyers in the subsequent auction and their posterior beliefs are not common knowledge any more.This thesis concludes that when buyers' competitons are fierce,disclosing the identities of buyers who submit the highest and the second highest bids is superior to disclosing the identity of the buyer who submits the highest bid.Theoretical analyses are based on the rigorous rationality assumption.As a result,practical values of theoretical results are queried to some extent.By carrying out a laboratory experiment,this thesis further compares the ranking disclosure policy with two other disclosure policies.The experimental results are basically consistent with our theoretical predictions.However,these are also some significant deviations.For example,actual bids under the ranking disclosure policy are equal to or higher than theoretical ones.Results of this study can provide theoretical guidance and suggestions on the design and optimization of auction mechanisms for substitutes with transportation cost differences(or similar differences).Moreover,this study also can be used to analyze and explain operation rules of some commercial activities such as information release of new products and product positionings.