Sorry Winners
Bidders who receive both "common-value'' and "private-value'' signals about the value of an auction prize cannot fully infer their opponents' information from the bidding, so may overestimate the value of the prize and, subsequently, regret winning. With multiple objects, prices in later auctions provide information relevant to earlier ones, and sequential auctions appear more vulnerable to overpayment and inefficiency than simultaneous auctions. However, aggregating across all auctions in a simple model, winners still earn positive profit ex-post. With information inequality among bidders, the seller's revenue is influenced by two competing effects. On the one hand, simultaneous auctions reduce the winner's curse of less informed bidders and allow them to bid more aggressively. On the other hand, sequential auctions induce less informed bidders to bid more aggressively in early auctions to acquire information.
Year of publication: |
2003-10-01
|
---|---|
Authors: | Pagnozzi, Marco |
Institutions: | Centro Studi di Economia e Finanza (CSEF) |
Saved in:
freely available
Saved in favorites
Similar items by person
-
Bids as a Vehicle of (Mis)Information: Collusion in English Auctions with Affiliated Values
Pagnozzi, Marco, (2004)
-
Vertical Separation with Private Contracts
Pagnozzi, Marco, (2010)
-
Resale and Bundling in Auctions
Pagnozzi, Marco, (2007)
- More ...