Core-Implementing Nash Equilibrium in the Vickrey Auction and Some Unstable Mechanisms

This paper demonstrates the Vickrey auction has a Nash equilibrium in the core. Generally, the dominant-strategy-equilibrium outcome of the Vickrey auction is not located in the core. However, a particular profile of truncation strategies is a Nash equilibrium, and it implements an outcome in the bidderoptimal core. The specified strategy profile is identical to that in core-selecting auctions discussed by Day and Milgrom (Int. J. Game Theory 2008). We introduce “Vickrey-reserving” auctions and show that a core-implementing Nash equilibrium exists in every Vickrey-reserving auction. JEL classification: D44