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On the Failure of the Linkage Principle in Multi‐unit Auctions
Author(s) -
Perry Motty,
Reny Philip J.
Publication year - 1999
Publication title -
econometrica
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 16.7
H-Index - 199
eISSN - 1468-0262
pISSN - 0012-9682
DOI - 10.1111/1468-0262.00056
Subject(s) - linkage (software) , common value auction , unit (ring theory) , economics , mathematical economics , mathematics , microeconomics , genetics , biology , mathematics education , gene
It is shown that the linkage principle (Milgrom and Weber (1982)) does not extend to the multi-unit auction setting. An analysis of the equilibium bidding strategies is carried out for the general two-agent/two-unit Vickrey auction in order to provide economic insight into the nature of the failure. In addition, an explicit counterexample is provided.