JOB Market Paper

Pay-as-bid Auctions with Private Information (available at SSRN)

The pay-as-bid auction is one of the most prominent mechanisms allocating divisible goods like energy. This paper analyzes equilibrium behavior in pay-as-bid auctions within a general environment where bidders are privately informed about their valuations. The key methodological innovation is to represent the auction as a continuum of asymmetric first-price auctions. I define an everywhere-optimal Bayes-Nash equilibrium, in which bid functions satisfy pointwise optimality, and characterize equilibrium strategies. With two bidders, I establish equilibrium uniqueness. The characterization enables accurate predictions of equilibrium bids even when estimated valuations contain small errors. For a class of linear marginal valuations, I derive closed-form solutions and show that pay-as-bid generates higher revenue than the VCG mechanism.

Working Paper

Optimality of One-stage Mechanisms in Asymmetric Electricity Networks (available upon request)

Electricity markets often manage network congestion with two-stage mechanisms. First, a fair spot market is designed to treat all players equally, regardless of their location in the asymmetric network. Second, the redispatch achieves a feasible dispatch. This paper identifies a trade-off between first-stage fairness and minimizing procurement costs. I use mechanism design theory to show that one-stage mechanisms can implement asymmetric dispatches with strictly lower procurement costs than a class of two-stage mechanisms with fair first stage. In detail, I analyze a market-based redispatch mechanism where inc-dec gaming creates arbitrage profits for those producers that benefit the network the least. These results challenge the rationale for uniform bidding zones in asymmetric regions.

Recent talks

• VfS Annual Conference, September 2025, Cologne.

• EARIE Annual Conference, August 2025, Valencia.

• Meeting of the European Economic Association, August 2025, Bordeaux.

• European Workshop on Market Design, June 2025, Mannheim.

• Econometric Society European Winter Meeting, December 2024, Palma.

teaching

Economic Policy (TA, Bachelor, University of Mannheim), Spring 2022, 2023, 2024, 2025

Introductory Finance (TA, Bachelor, University of Mannheim), Fall 2016, 2018

Contact

linnenbrink[at]uni-mannheim.de