Competitive Bidding in Auctions with Private and Common Values

See the article with the same title in the 'Economic Journal' (2003), 113, 598-614.<p> The objects for sale in most auctions possess both private and common value elements. This salient feature has not yet been incorporated into a strategic analysis of equilibrium bidding behaviour. This paper reports such an analysis for a stylised model in which bidders receive a private value signal and an independent common value signal. We show that more uncertainty about the common value has a negative effect on efficiency. Information provided by the seller decreases uncertainty, which raises efficiency and seller's revenues. Efficiency and revenues are also higher when more bidders enter the auction.<P>This discussion paper has resulted in a publication in <A href="http://web.ebscohost.com/ehost/detail?vid=4&hid=8&sid=e73baab6-a19b-439c-8821-ae0b0080b101%40sessionmgr10&bdata=JnNpdGU9ZWhvc3QtbGl2ZQ%3d%3d#db=buh&AN=10219878"><I>The Economic Journal</I></A>, 2003, 113(489), 598-613.