An Analysis of Troubled Assets Reverse Auction

  • Authors:

  • Saeed Alaei;Azarakhsh Malekian

  • Affiliations:

  • Dept. of Computer Science, University of Maryland, College Park 20742;Dept. of Computer Science, University of Maryland, College Park 20742

  • Venue:
  • WINE '09 Proceedings of the 5th International Workshop on Internet and Network Economics
  • Year:
  • 2009

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Abstract

In this paper we study the Nash-equilibrium and equilibrium bidding strategies of the Pooled Reverse Auction for troubled assets. The auction was described in (Ausubel & Cramton 2008[1]). We further extend our analysis to a more general class of games which we call Summation Games. We prove the existence and uniqueness of a Nash-equilibrium in these games when the utility functions satisfy a certain condition. We also give an efficient way to compute the Nash-equilibrium of these games. We show that then Nash-equilibrium of these games can be computed using an ascending auction. The aforementioned reverse auction can be expressed as a special instance of such a game. We also, show that even a more general version of the well-known oligopoly game of Cournot can be expressed in our model and all of the previously mentioned results apply to that as well.