Haoyuan Zeng 曾皓原

This paper studies the incentives of the seller and buyers to shill bid in a single-item auction. An auction is seller identity-compatible if the seller cannot profit from pretending to be one or more bidders via fake identities. It is buyer identity-compatible if no buyer profits from posing as more than one bidder. Lit auctions reveal the number of bidders, whereas dark auctions conceal the information. We characterize three classic selling mechanisms—first-price, second-price, and posted-price—based on identity compatibility. We show the importance of concealing the number of bidders, which enables the implementation of a broader range of outcome rules. In particular, no optimal lit auction is ex-post seller identity-compatible, while the dark first-price auction (with reserve) achieves the goal.

This paper introduces a novel criterion, persuasiveness, to select equilibria in signaling games. In response to the Stiglitz critique, persuasiveness focuses on the comparison across equilibria. An equilibrium is more persuasive than an alternative if the set of types of the sender who prefer the alternative would sequentially deviate to the former once other types have done so—that is, if an unraveling occurs. Persuasiveness has strong selective power: it uniquely selects an equilibrium outcome in monotone signaling games. Moreover, in non-monotone signaling games, persuasiveness refines predictions beyond existing selection criteria. Notably, it can also select equilibria in cheap-talk games, where standard equilibrium refinements for signaling games have no selective power.

We study the design of mechanisms—e.g., auctions—when the designer does not control information flows between mechanism participants. A mechanism equilibrium is leakage-proof if no player conditions their actions on leaked information; a property distinct from ex-post incentive compatibility. Only leakage-proof mechanisms can implement social choice functions in environments with leakage. Efficient auctions need to be leakage-proof, while revenue-maximizing ones not necessarily so. Second-price and ascending auctions are leakage-proof; first-price auctions are not; while whether descending auctions are leakage-proof depends on tie-breaking.