| This dissertation comprises three essays on auctions and competitive bidding.; In the first essay, we compare an auction where bids have two dimensions, quality and price, with a first-price sealed-bid auction for a fixed-quality product. Multi-dimensional bidding, or letting the bidders decide upon both product quality and price, yields a higher utility to the auctioneer provided her preference structure is common knowledge. On the other hand, multi-dimensional bidding might not be so good for the auctioneer whose utility function is unknown to the bidders, because each of them may find a niche where a large portion of the auctioneer's surplus is captured in the event of winning.; In the second essay, we propose some new concepts of "simpleness" and "robustness" in order to compare different allocation mechanisms and, by extension, different economic institutions. Our notion of robustness involves relaxing the usual presumption of mechanism design that the environment, i.e. the agents' information and preference structures, is common knowledge between the planner herself and the agents. An auction is said to be robust over a class of environments if any other allocation mechanism yielding a higher expected price in all these environments must be able to mimic it. We identify classes of environments over which the currently used auctions are robust.; In the third essay, we introduce a condition that, when verified, its sufficient to ensure that stationary strategies of an auction game are equilibrium bidding strategies. Intuitively, this condition requires the indifference curves of a higher-type bidder to cross the indifference curves of a lower-type one only once and from above. This geometrical feature justifies the name "single-crossing property" (SCP) for the condition. We show that SCP is frequently assumed, although implicitly, throughout the theoretical and empirical literature on auctions. |
