On The Failure of the Linkage Principle in Multi-Unit Auctions

Authors: 
Motty Perry & Philip J. Reny
Abstract: 

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 gneral 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.

Date: 
September, 1997
Published in: 
Econometrica 67 (1999), 895-900.
Number: 
157