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- Title
Decision-Analytic Approach to Knockout Auctions.
- Authors
Gerchak, Yigal
- Abstract
Society seems to have developed several ingenious schemes for allocating jointly owned indivisible items. One such scheme, occasionally used to divide estates among heirs, is a knockout auction (Engelbrecht-Wiggans 1994). In a knockout auction, the joint owners bid for the item; the highest bidder obtains it and pays the others their share of the winning bid. This paper follows the advice of Raiffa and Rothkopf to view auctions from a decision-analytic point of view, and analyzes the optimal bid of an expected-utility maximizing participant in a knockout auction who is uncertain about the bids of others, and contrasts it to the properties of optimal declarations in buy-sell agreements, derived in Gerchak and Fuller (1992).
- Subjects
AUCTIONS; BAILMENTS; BIDDERS; ESTATES (Law); INHERITANCE &; succession; BIDS; OFFER &; acceptance (Contracts); CONTRACTS; DECISION making
- Publication
Decision Analysis, 2008, Vol 5, Issue 1, p19
- ISSN
1545-8490
- Publication type
Article
- DOI
10.1287/deca.1080.0107