This paper proposes an equilibrium approach to deception where deception is defined to be the process by which actions are chosen to induce erroneous inferences so as to take advantage of them. Specifically, we introduce a framework with boundedly rational players in which agents make inferences...

This paper proposes an equilibrium approach to belief manipulation and deception in which agents only have coarse knowledge of their opponent's strategy. Equilibrium requires the coarse knowledge available to agents to be correct, and the inferences and optimizations to be made on the basis of...

We consider an auction setting, in a symmetric information framework, in which bidders, even if they fail to obtain the good, care about the price paid by the winner. We prove that the outcome of the first- price auction is not aff ected by identity independent price externalities while the...

We consider a setting in which two potential buyers, one with a prior toehold and one without, compete in a takeover modeled as an ascending auction with participating costs. The toeholder is more aggressive during the takeover process because she is also a seller of her own shares. The...

We study the impact of crossholdings on the efficiency of the standard auction formats. The ascending auction is not equivalent to the second-price auction. In a class of examples, the ascending auction is the only efficient standard auction format.

We evaluate the impact of three auction mechanisms--the Becker-DeGroot-Marschak (BDM) mechanism, the second-price auction (SPA), and the random nth-price auction (NPA)--in the measurement of private willingness-to-pay and willingness-to-accept for a pure public good. Our results show that the...

This paper examines how shareholdings affect auctions' revenue and efficiency with independent private values. Two types of shareholdings are analyzed: Vertical (resp: horizontal) toeholds cover situations in which bidders own a fraction of the seller's profit (resp: a share of their...

We analyze the privatization of highway firms, focusing both on the sale of the shares of these firms and the tenders organized by the highway firms for the maintenance of the highways network. If a public works firm buys shares of a highway firm, tenders become inefficient and the revenue of...

We consider a purely speculative market with finite horizon and complete information. We introduce partially sophisticated investors, who know the average buy and sell strategies of other traders, but lack a precise understanding of how these strategies depend on the history of trade. In this...